6 Time Value of Money Calculations

Using the TVM Application

The time value of money (TVM) application is used for compound interest calculations that involve regular, uniform cash flows – called payments. Once the values are entered you can vary one value at a time, without entering all the values again.

To use TVM, several prerequisites must be met:

•The amount of each payment must be the same. If the payment amounts vary, use the procedures described in chapter 8 titled, Cash Flow Calculations.

•Payments must occur at regular intervals.

•The payment period must coincide with the interest compounding period. If it does not, convert the interest rate using the \Ó, \Ð, and \Íkeys described below in the

section titled, Interest Rate Conversions.

•There must be at least one positive and one negative cash flow.

The TVM Keys

When entering data for TVM calculations, results are calculated based on data entered into specific memory registers. When pressed, the keys used for these operations:

•store data.

•enter known data for variables used during calculations.

•calculate unknown variables based on stored data.

Table 6-1 Keys for performing TVM calculations

KeysStores or Calculates

Ù

Number of payments or compounding periods.

 

 

 

Ò

Annual nominal interest rate.

 

 

 

Ï

Present value of future cash flows. PV is usually an initial investment or

loan amount and always occurs at the beginning of the first period.

 

 

Ì

Amount of periodic payments. All payments are equal, and none are

skipped; payments can occur at the beginning or end of each period.

 

 

É

Future value. FV is either a final cash flow or compounded value of a

series of previous cash flows. FV occurs at the end of the last period.

 

 

\Í

Stores the number of periods per year. The default is 12. Reset only

when you wish to change it.

 

 

\Ú

Optional shortcut for storing N: number in display is multiplied by the

value in P/YR and the result is stored in N.

 

 

Time Value of Money Calculations 61

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HP 10bII+ Financial manual Time Value of Money Calculations, Using the TVM Application, TVM Keys
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10bII+ Financial specifications

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In summary, the HP 10bII+ Financial Calculator is a high-performance device that combines essential financial functions with user-friendly design and robust technology. Whether for educational purposes or professional finance work, its capabilities make it an invaluable asset for anyone dealing with financial calculations and decision-making.
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