HP 10bII+ Financial manual Gs\Í, PvÙ1, VÏ4, Savings, Saving for College Costs

Table 13-18 Calculating the number of years required to pay off the loan

Keys	Display	Description
GS\Í		two weeks.
	26.00	Sets payments per year for every
Ù	514.82	Calculates number of biweekly
		payments.
v\Ú	19.80	Displays years required to pay
		off the loan.

Part 3

What if you had monthly payments as in part 1, but chose a 15-year term? What would your new payment be? What would be the total interest paid on the contract?

Table 13-19	Calculating the total interest paid on the contract
Keys		Display	Description
JG\Í		12.00	Sets payments per year.
JV\Ú		180.00	Stores new term.
Ì		-8,446.53	Calculates payment for shorter
			term.
PvÙ1		-1,520,374.70	Calculates total paid.
vÏ4		-785,374.70	Displays the total interest paid
			on the contract.

Savings

Saving for College Costs

Suppose you start saving now to accommodate a future series of cash outflows. An example of this is saving money for college. To determine how much you need to save each period, you must know when you’ll need the money, how much you’ll need, and at what interest rate you can invest your deposits.

Example

Your oldest daughter will attend college in 12 years and you are starting a fund for her education. She will need 15,000 at the beginning of each year for four years. The fund earns 9% annual interest, compounded monthly, and you plan to make monthly deposits, starting at the end of the current month. The deposits cease when she begins college. How much do you need to deposit each month?

This problem is solved in two steps. First calculate the amount you’ll need when she starts college. Start with an interest rate conversion because of the monthly compounding.

148 Additional Examples