Figure 11 Cash flow diagram (Calculate the number of years)
Since this account has no regular payments (PMT = 0), the payment mode (End or Begin) is irrelevant.
Table
KeysDisplay Description
]OJ | 0.00 | Clears TVM memory. |
| ||
|
|
|
J\Í | 1.00 | Sets P/YR to 1 since interest is |
| compounded annually. | |
|
|
|
G:::yÏ |
| first deposit. |
| Stores amount paid out for the | |
|
|
|
D:::É | 3,000.00 | Stores the amount you wish to |
| accumulate. | |
|
|
|
j7GÒ | 7.20 | Stores annual interest rate. |
| ||
|
|
|
Ù | 5.83 | Calculates the number of years it |
| takes to reach 3,000. | |
|
|
|
Since the calculated value of N is between 5 and 6, it will take six years of annual compounding to achieve a balance of at least 3,000. Calculate the actual balance at the end of six years.
68 Time Value of Money Calculations