financial calculators
Download
Skip this Video
Download Presentation
Financial Calculators

Loading in 2 Seconds...

play fullscreen
1 / 155

Financial Calculators - PowerPoint PPT Presentation


  • 194 Views
  • Uploaded on

Financial Calculators. ILX Lightwave May 14, 2003. Marsha A. Goetting Ph.D., CFP ® , CFCS. Professor & Extension Family Economics Specialist Department of Agricultural Economics & Economics. How many of you have used a financial calculator?????.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Financial Calculators ' - issac


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
financial calculators

Financial Calculators

ILX Lightwave

May 14, 2003

marsha a goetting ph d cfp cfcs

Marsha A. Goetting Ph.D., CFP®, CFCS

Professor & Extension Family Economics Specialist

Department of Agricultural Economics & Economics

financial calculator
Financial Calculator
  • Texas Instruments BA-35 Solar Business Analyst
  • Cost about $20 at most discount stores
introduction
Introduction
  • Getting Acquainted with your Financial Calculator
turn on
Turn on

CE/C

Fix

MODE

AC/ON

2nd

CPT

x 12

¸ 12

PV

PMT

N

% i

FV

financial mode
Financial Mode
  • If FIN is not lower left corner
  • Press

CPT

AC/ON

MODE

Fin 0.

decimal function
Decimal Function

Fix

  • Press

2nd

CPT

2

FIN 0.00

2nd

clearing screen display
Clearing Screen/Display
  • Press key once
  • Clears Display
  • Corrects Incorrect Entries
  • Clears word “Error”

CE/C

clearing financial registers
Clearing Financial Registers

CMR

  • Press key
  • Clears numbers in registers & display

2nd

CE/C

CE/C

N

%i

PV

PMT

FV

finance keys
Finance Keys

N

Number of Periods

Interest Rate

Payment Amount

% i

PMT

finance keys20
Finance Keys

PV

Present Value

Future Value

Compute key

FV

CPT

finance key
Finance Key

PV

Present Value

Value of the $avings you have today

future value 10 000
Future Value $10,000
  • Clear registers 2nd CE/C CE/C
  • Enter PV 10,000 PV
  • Enter # Periods 20 N
  • Enter % Rate 3 %i
  • CPT FV18,061.11
future value 15 000
Future Value $15,000
  • Clear registers 2nd CE/C CE/C
  • Enter PV 15,000 PV
  • Enter # Periods 5 N
  • Enter % Rate 6.25 %i
  • CPT FV 20,311.22
future value 50 000
Future Value $50,000
  • Clear registers 2nd CE/C CE/C
  • Enter PV 50,000 PV
  • Enter # Periods 40 N
  • Enter % Rate 5 %i
  • CPT FV351,999.44wait
what if
What if ?????
  • You want to know what the amount will grow to in 15 years instead of 40….just change the

N

future value 15 years
Future Value 15 years
  • Clear registers 2nd CE/C CE/C
  • Enter PV 50,000 PV
  • Enter # Periods15 N
  • Enter % Rate 5 %i
  • CPT FV 103,946.41
the difference
The difference
  • 40 yrs = $351,999.43
  • 15 yrs = $103,946.41

$248,053.02

payments deposits
Payments (Deposits)
  • Enter deposit amount as a negative value
  • 2,000
  • Screen: -2,000.00

+/-

PMT

ira single person
IRA(single person)
  • $2,000 per year for 26 years
  • What amount will be in his IRA?
ira single person35
IRA(single person)
  • Clear registers 2nd CE/C CE/C
  • Enter PMT2,000 +/- PMT
  • Enter # Periods 26 N
  • Enter % Rate 5 %i
  • CPT FV 102,226.91
ira married couple
IRA(married couple)
  • $2,000 each per year for 25 years
  • What amount will be in their IRAs?
ira married couple37
IRA--Married Couple
  • Clear registers 2nd CE/C CE/C
  • Enter PMT4,000 +/- PMT
  • Enter # Periods 25 N
  • Enter % Rate 11 %i
  • CPT FV457,653.23(hold)
what if38
What if ?????
  • Interest rate is only 4% instead of 11%….just change the amount in

% i

ira married 4
IRA--Married 4%
  • Clear registers 2nd CE/C CE/C
  • Enter PMT4,000 +/- PMT
  • Enter # Periods 25 N
  • Enter % Rate 4 %i
  • CPT FV 166,583.63
the difference40
The difference
  • 11% = $457,653.23
  • 4% = $166,583.63

$291,069.63

roth ira
Roth IRA
  • After-tax dollars
  • Accumulations can be withdrawn tax-free if:
    • age 59 1/2
    • held for 5 years
roth ira42
Roth IRA
  • $3,000 per year for 40 years
  • What amount will be in the Roth IRA?
roth ira43
Roth IRA
  • Clear registers 2nd CE/C CE/C
  • Enter PMT3,000 +/- PMT
  • Enter # Periods 40 N
  • Enter % Rate 5 %i
  • CPT FV $362,399.32
roth ira44
Roth IRA
  • $3,000 per year for 20 years.
  • What amount will be in the Roth IRA?
roth ira45
Roth IRA
  • Clear registers 2nd CE/C CE/C
  • Enter PMT3,000 +/- PMT
  • Enter # Periods 20 N
  • Enter % Rate 6 %i
  • CPT FV $110,356.77
new problem
New Problem:
  • How much will we have in the future if we add annually to our present savings?
annual deposits with beginning balance 10 000
Annual Deposits with Beginning Balance$10,000
  • Clear registers 2nd CE/C CE/C
  • Enter PV (Beg. Bal.) 10,000 PV
  • Enter PMT 2,000 +/- PMT
  • Enter % Rate 5 %i
  • Enter # Periods 7 N
  • CPT FV 30,355.02 (hold)
what if50
What if ?????
  • Interest rate is only 3% instead of 5%
  • Just change the interest rate

% i

annual deposits with beginning balance 10 00051
Annual Deposits with Beginning Balance$10,000
  • Clear registers 2nd CE/C CE/C
  • Enter PV (Beg. Bal.) 10,000 PV
  • Enter PMT 2,000 +/- PMT
  • Enter % Rate 3 %i
  • Enter # Periods 7 N
  • CPT FV 27,623.66
difference rate
Difference % rate
  • 5% = $30,355.02
  • 3% = $27,623.66

$2,731.36

education fund 1 000 add annually 2 500
Education Fund--$1,000 Add annually $2,500
  • Clear registers 2nd CE/C CE/C
  • Enter PV (Beg. Bal.) 1,000 PV
  • Enter PMT 2,500 +/- PMT
  • Enter % Rate 6.5 %i
  • Enter # Periods 18 N
  • CPT FV 84,131.82
retirement fund 15 000 add annually 1 200
Retirement Fund--$15,000 Add annually $1,200
  • Clear registers 2nd CE/C CE/C
  • Enter PV (Beg. Bal.) 15,000 PV
  • Enter PMT 1,200 +/- PMT
  • Enter % Rate 8.5 %i
  • Enter # Periods 25 N
  • CPT FV 209,702.79
convert 2 items
Convert 2 items
  • Interest Rate
  • # of Periods

% i

N

annual interest rate
Annual Interest Rate
  • 18.5 % Annual Percentage Rate
  • Convert to monthly
monthly interest rate
Monthly Interest Rate
  • Divide interest rate by 12
    • 18.5 ¸ 12 =1.54
    • Then press

%i

of periods monthly
# of Periods-Monthly
  • Multiply number of years by 12
  • 6 yearsx 12 = 72
  • Then press

N

grandparents
Grandparents
  • Save $5 each month for 18 years
5 per month
$5 per month
  • Clear registers 2nd CE/C CE/C
  • Enter PMT5 +/- PMT
  • # Periods18 x 12 = 216 N
  • % Rate5.5 ¸ 12 = 0.46 %i
  • CPT FV 1,838.35
60 per month
$60 per month
  • Clear registers 2nd CE/C CE/C
  • Enter PMT60 +/- PMT
  • # Periods18 x 12 = 216 N
  • % Rate6.5 ¸ 12 = 0.54 %i
  • CPT FV 24,500.33
save 100
Save $100
  • Each month for 30 years
100 each month
$100 each month
  • Clear registers 2nd CE/C CE/C
  • Enter PMT100 +/- PMT
  • # Periods 30 x 12 = 360 N
  • % Rate5.5¸12 = 0.46 %i
  • CPT FV 91,361.19
monthly savings68
Monthly Savings
  • Clear registers 2nd CE/C CE/C
  • Enter PMT600 +/- PMT
  • # Periods 5 x 12 = 60 N
  • % Rate9.5 ¸ 12 = 0.79 %i
  • CPT FV 45,853.35
retirement fund 15 000 add monthly 100
Retirement Fund--$15,000 Add monthly-- $100
  • Clear registers 2nd CE/C CE/C
  • Enter PV (Beg. Bal.) 15,000 PV
  • Enter PMT 100 +/- PMT
  • % Rate 5 ¸ 12 = 0.42 %i
  • # Periods 25 x 12 = 300 N
  • CPT FV 111,770.33
future value savings
Future Value Savings
  • Lump Sum Savings
  • Annual Savings
  • Monthly Savings
  • Beginning balance & add yearly or monthly
alternatives
Alternatives

Bank

Credit

Union

Savings &

Loan

which pays more
Which pays more?
  • 5.80% compounded quarterly
  • 5.75 % cp monthly
  • 5.50% cp daily
converting
Converting
  • Annual Percentage Rate (APR) to
  • Annual Effective Yield (AEY)
eff key
EFF Key

CE/C

Fix

CPT

MODE

AC/ON

2nd

EFF

2

3

RCL

1

5 8 compounded quarterly
5.8compounded quarterly
  • Clear 2nd CE/C CE/C
  • Enter interest rate 5.8
  • Press 2nd EFF
  • Enter # cp 4
  • Press = 5.93

1

5 75 compounded monthly
5.75compounded monthly
  • Clear 2nd CE/C CE/C
  • Enter interest rate 5.75
  • Press 2nd EFF
  • Enter # cp 12
  • Press = 5.90

1

5 5 compounded daily
5.5compounded daily
  • Clear 2nd CE/C CE/C
  • Enter interest rate 5.5
  • Press 2nd EFF
  • Enter # cp 365
  • Press = 5.65

1

which account pays most
Which account pays most?
  • 5.8 % cp quarterly = 5.93
  • 5.75 % cp monthly = 5.90
  • 5.5 % cp daily = 5.65
annual deposits with beginning balance 10 00080
Annual Deposits with Beginning Balance$10,000
  • Clear registers 2nd CE/C CE/C
  • Enter PV (Beg. Bal.) 10,000 PV
  • Enter PMT 2,000 +/- PMT
  • Enter % Rate 5.93 %i
  • Enter # Periods 20 N
  • CPT FV104,670.38 (hold)
annual deposits with beginning balance 10 00081
Annual Deposits with Beginning Balance$10,000
  • Clear registers 2nd CE/C CE/C
  • Enter PV (Beg. Bal.) 10,000 PV
  • Enter PMT 2,000 +/- PMT
  • Enter % Rate 5.65 %i
  • Enter # Periods 20 N
  • CPT FV 100,880.77
difference 20 yrs
Difference 20 yrs
  • 5.93 = $104,670.38
  • 5.65 = $100,880.77

$3,389.61

credit card
Credit Card
  • Average balance
    • $1,825bank credit card
  • 18% APR
credit card85
Credit Card
  • Pay $28 minimum payment
  • How long to pay off??????
28 monthly payment
$28 monthly payment
  • 21 years
  • 16 years
  • 11 years
  • 5 years
interest paid
Interest Paid
  • $5,325
  • $3,460
  • $2,377
  • $ 956
credit card 1 825
Credit Card $1,825
  • Clear registers 2ndCE/CCE/C
  • Credit balance1,825 PV
  • % Rate18 ¸ 12 = 1.5 %i
  • Payment 28 PMT
  • CPT N 255.38 months
  • ¸ 12 = 21.28 yrs (Don’t clear)
compute interest paid
Compute interest paid
  • Press again:
  • CPT N 255.38
  • # of monthly payments
interest paid90
255.38 months

x $28 payments

$ 7,150.55 paid back

-$ 1,825.00 loan

Interest Paid
credit cards
Credit Cards
  • Donna’s Balance $6,500
  • APR 19%
  • $130 payments
how long to pay off
How long to pay off?
  • Clear registers 2nd CE/C CE/C
  • Loan Amount 6,500 PV
  • Payment 130 PMT
  • % Rate19 ¸ 12 = 1.58 %i
  • CPT N (months) 99.85
  • ¸12 = 8.32 years (don’t clear)
compute interest paid94
Compute interest paid
  • Press again:
  • CPT N 99.85
  • # of monthly payments
interest paid95
99.85 months

x $130 payments

$ 12,980.86 paid back

- 6,500.00 credit balance

Interest Paid
increase payment
Increase payment
  • Old payment
    • $130
  • New payment
    • $230
how long to pay off98
How long to pay off?
  • Clear registers 2nd CE/C CE/C
  • Loan Amount 6,500 PV
  • Payment 230 PMT
  • % Rate19 ¸ 12 = 1.58 %i
  • CPT N (months) 37.76
  • ¸12 = 3.15 years
compute interest paid99
Compute interest paid
  • Press again:
  • CPT N 37.76
  • # of monthly payments
interest paid100
37.76 months

x $230 payments

$ 8,685.58 paid back

- 6,500.00 credit balance

Interest Paid
the difference102
The difference
  • $130 8.32 yrs = $6,490.86
  • $230 3.15 yrs = $2,185.58

$4,305.28

central idea
Central Idea
  • Paying off credit card balance sooner means higher payments, but
    • you pay less INTERE$T
dream home
Dream Home
  • Average price
    • $135,000
  • Down payment
    • $27,000
payment amount
Payment Amount?
  • Finance $108,000
  • APR 9.5%
  • 30 year mortgage
payment
Payment?
  • Clear registers 2nd CE/C CE/C
  • Loan Amount 108,000 PV
  • # Periods30 x 12 = 360 N
  • % Rate 9.5 ¸ 12 = 0.79 %i
  • CPT PMT 908.12
cheaper home
Cheaper Home
  • Finance $66,000
  • APR 13%
  • 30 year mortgage
payment108
Payment?
  • Clear registers 2nd CE/C CE/C
  • Loan Amount 66,000 PV
  • # Periods 30 x 12 = 360 N
  • % Rate13 ¸ 12 = 1.08 %i
  • CPT PMT 730.09 (hold)
young professionals
Young Professionals
  • What if we pay an extra $100 towards principal each month ?
extra 100
Extra $100
  • Clear registers 2nd CE/C CE/C
  • Loan Amount66,000 PV
  • Payment 830.09 PMT
  • % Rate13 ¸ 12 = 1.08 %i
  • Compute months CPT N 183.37
  • ¸12 =15.28 yrs
comparison
$730

30 yrs

$830

15.28 yrs

Comparison
payment comparison
$730.09 Monthly

x 360 # payments

$262,833 Paid Back

- $66,000 Loan

$196,833 Interest

$830.09 Monthly

x 183.37 # payments

$152,213 Paid Back

-$66,000 Loan

$86,213 Interest

Payment Comparison

$110,620 saved

credit examples
Credit Examples
  • Payments on Mortgage & Credit Cards
  • Time remaining on loans if increase payments
  • Calculate monthly interest charge
retirement decisions
Retirement Decisions
  • How much should I save for retirement?
retirement goal
Retirement Goal
  • $500,000
  • By age 65
    • 40 years
  • How much to save monthly?
goal 500 000
Goal: $500,000
  • Clear registers 2nd CE/C CE/C
  • Enter FV 500,000 FV
  • % Rate8 ¸ 12 =0.67 %i
  • # Periods 40 x 12 = 480 N
  • CPT PMT- 143.23 (don’t clear)
what if119
What if ?????
  • You already have $18,000 in savings that you have designated for retirement?
  • Now you have

PV

500 000 18 000
$500,000($18,000)
  • Clear registers 2nd CE/C CE/C Enter FV 500,000 FV
  • Enter PV18,000 PV
  • % Rate 8 ¸ 12 = 0.67 %i
  • # Periods 40 x 12 = 480 N
  • CPT PMT - 18.07 (hold)
what if122
What if ?????
  • You already have $90,000 in savings that you have designated for retirement?
500 000 90 000
$500,000($90,000)
  • Clear registers 2nd CE/C CE/C
  • Enter FV 500,000 FV
  • Enter PV90,000 PV
  • % Rate 8 ¸ 12 = 0.67 %i
  • # Periods 40 x 12 = 480 N
  • CPT PMT 482.56
goal 300 000
Goal:$300,000
  • Retire 20 yrs
  • Has $5,000
  • How much to save monthly?
300 000 5 000
$300,000($5,000)
  • Clear registers 2nd CE/C CE/C
  • Enter FV 300,000 FV
  • Enter PV 5,000 PV
  • % Rate 8 ¸ 12 = 0.67 %i
  • # Periods 20 x 12 = 240 N
  • CPT PMT - 467.50
goal 100 000
Goal: $100,000
  • Retire 10 yrs
  • Has $15,000
  • How much to save monthly?
goal 100 000128
Goal: $100,000
  • Clear registers 2nd CE/C CE/C
  • Enter FV 100,000 FV
  • Enter PV 15,000 PV
  • % Rate 5 ¸ 12 = 0.42 %i
  • # Periods 10 x 12 = 120 N
  • CPT PMT - 484.89
retired couple
Retired Couple
  • “How much can we take out of our retirement fund monthly if we want it to last 20 years?”
retirement fund 115 000
Retirement Fund $115,000
  • Clear registers 2nd CE/C CE/C
  • Retirement Fund 115,000 PV
  • # Periods 12 x 20 = 240 N
  • % Rate4 ¸ 12 = 0.33 %i
  • CPT PMT 696.88
single person
Single Person
  • Retirement fund $250,000
  • Last 30 years
250 000 30 yrs
$250,000 (30 yrs)
  • Clear registers 2nd CE/C CE/C
  • Retirement Fund 250,000 PV
  • # Periods 12 x 30 = 360 N
  • % Rate 5 ¸ 12 = 0.42 %i
  • CPT PMT 1,342.05
slide133
IRA
  • $50,000
  • Supplement Social Security for 20 years
50 000 ira
$50,000 IRA
  • Clear registers 2nd CE/C CE/C
  • Retirement Fund 50,000 PV
  • # Periods 12 x 20 = 240 N
  • % Rate4 ¸ 12 = 0.33 %i
  • CPT PMT302.99
retired couple135
Retired Couple
  • “How long will our retirement fund ($100,000) last if we take out $1,200 monthly?”
100 000 fund
$100,000 fund
  • Clear registers 2nd CE/C CE/C
  • Retirement Fund 100,000 PV
  • Payment 1,200 PMT
  • % Rate 4 ¸12 = 0.33 %i
  • Compute months CPT N 97.79
  • ¸ 12 = 8.15 yrs (don’t clear)
100 000 fund137
$100,000 fund
  • Clear registers 2nd CE/C CE/C
  • Retirement Fund 100,000 PV
  • Payment 900 PMT
  • % Rate 4 ¸12 = 0.33 %i
  • Compute months CPT N 139.02
  • ¸ 12 = 11.58 (don’t clear)
100 000 fund138
$100,000 fund
  • Clear registers 2nd CE/C CE/C
  • Retirement Fund 100,000 PV
  • Payment 650 PMT
  • % Rate 4 ¸12 = 0.33 %i
  • Compute months CPT N 216.10
  • ¸ 12 = 18.01 years
the difference139
The difference
  • $1,200 monthly = 8.15 yrs
  • $ 900 monthly = 11.58 yrs
  • $ 650 monthly = 18.01 yrs
retirement
Retirement
  • Amount to save monthly to achieve retirement goals
retirement142
Retirement
  • Amount to take out monthly during retirement based on life expectancy
retirement143
Retirement
  • How long retirement fund will last if take out specific amount monthly
inflation
Inflation

1999 2.2%

inflation145
Inflation
  • If I need $1,500 per month now …. how much will I need in 25 years????
inflation146
INFLATION
  • Clear registers 2nd CE/C CE/C
  • Enter PV 1,500 PV
  • Enter # Periods 25 N
  • Enter % Rate 6.3 %i
  • CPT FV6,909.12 (hold)
what if147
What if ?????
  • Inflation is only 4.2% instead of 6.3%.….just change the inflation rate key

% i

inflation example
INFLATION EXAMPLE
  • Clear registers 2nd CE/C CE/C
  • Enter PV 1,500 PV
  • Enter # Periods 25 N
  • Enter % Rate 4.2 %i
  • CPT FV 4,195.50
difference 15 yrs
Difference 15 yrs
  • 6.3% = $6,909.12
  • 4.2% = $4,195.50

$2,713.62

inflation150
Inflation
  • If we need $2,000 per month now …. how much will we need in 15 years?
inflation example151
INFLATION EXAMPLE
  • Clear registers 2nd CE/C CE/C
  • Enter PV 2,000 PV
  • Enter # Periods 15 N
  • Enter % Rate 4 %i
  • CPT FV3,601.89
inflation152
Inflation
  • If I need $2,500 per month now …. how much will I need in 25 years?
inflation example153
INFLATION EXAMPLE
  • Clear registers 2nd CE/C CE/C
  • Enter PV 2,500 PV
  • Enter # Periods 25 N
  • Enter % Rate 4.25 %i
  • CPT FV7,076.88
marsha a goetting ph d cfp cfcs155

Marsha A. Goetting Ph.D., CFP®, CFCS

Professor & Extension Family Economics Specialist

Department of Agricultural Economics & Economics

ad