Step 2: Calculate NUS for the monthly deposit.

 

Keys:

Display:

Description:

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Figures the periodic

 

 



(monthly) interest rate and

 

 

 

 

stores it in I%.

 

 

 

Amount of monthly deposit

 

 



 

 

 

 

needed to meet

 

 

 

 

planned withdrawals.

 Calculates the net present value of the monthly deposits, which is the same as the NPV of the four future withdrawals.

Value of a Tax-Free Account

See appendix F for RPN keystrokes for this example.

You can use the TVM menu to calculate the future value of a tax-free or tax-deferred account, such as an IRA or Keogh account. Remember that for calculations with cash flows, money paid out is negative and money received is positive. (Current tax law and your current income will determine whether just interest or also principal are tax-free, and for how long. You can solve for either case.)

N= the number of payments until retirement. I%YR = the annual dividend rate.

PV = the present value of the retirement account.

PMT = the amount of your deposit. (It must be constant for the duration of the account.)

FV = the future value of the retirement account.

The purchasing power of that future value depends on the inflation rate and the duration of the account.

206 14: Additional Examples

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