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34 Section 3: Basic Financial Functions
File name: hp 12c_user's guide_English_HDPMBF12E44 Page: 34 of 209
Printered Date: 2005/7/29 Dimension: 14.8 cm x 21 cm
Keystrokes Display
7¼
7.00
Stores the annual interest rate.
450Þ$
–450.00
Stores the principal.
fÏ
5.25
Accrued interest, 360-day basis.
+
455.25
Total amount: principal plus accrued
interest.
Example 2:
Your friend agrees to the 7% interest on the loan from the preceding
example, but asks that you compute it on a 365-day basis rather than a 360-day
basis. What is the amount of accrued interest he will owe you in 60 days, and
what is the total amount owed
?
Keystrokes Display
60n
7¼
450Þ$
60.00
7.00
–450.00
If you have not altered the numbers in
the n, i, and PV registers since the
preceding example, you may skip
these keystrokes.
fÏd~
5.18
Accrued interest, 365-day basis.
+
455.18
Total amount: principal plus accrued
interest.
Financial Calculations and the Cash Flow Diagram
The concepts and examples presented in this section are representative of a wide
range of financial calculations. If your specific problem does not appear to be
illustrated in the pages that follow, don’t assume that the calculator is not capable
of solving it. Every financial calculation involves certain basic elements; but the
terminology used to refer to these elements typically differs among the various
segments of the business and financial communities. All you need to do is identify
the basic elements in your problem, and then structure the problem so that it will
be readily apparent what quantities you need to tell the calculator and what
quantity you want to solve for.
An invaluable aid for using your calculator in a financial calculation is the cash
flow diagram. This is simply a pictorial representation of the timing and direction
of financial transactions, labeled in terms that correspond to keys on the calculator.
The diagram begins with a horizontal line, called a time line. It represents the
duration of a financial problem, and is divided into compounding periods. For
example, a financial problem that transpires over 6 months with monthly
compounding would be diagrammed like this: