future value and present value Using Financial Calculators参考.ppt

Chapter 8 Compound Interest: future value and present value 8.4 Using Financial Calculators Five calculator models SHARP EL-733A SHARP EL-735 TEXAS INSTRUMRNTS BA 35 TEXAS INSTRUMRNTS BA II PLUS HEWLETT-PACKARD 10B Each of the five keys has two uses: Example: Compute the future value of $1000 invested at 8% compounded semiannually for three years. Solution: j=8% m=2 i=j/m=4% n=3*2=6 You can operate your calculator more efficiently if you take advantage of the following features: After any computation, the values previously saved in the memories still remain. At any time you can check the value stored in any memory by pressing followed by the key for the particular memory. When turned off, most calculators will retain their settings and the values in memory. (when the calculator’s battery becomes weak, this feature and other calculator operations are unreliable.) Cash-Flow Sign Convention Cash-flow :refers to a cash disbursement (cash outflow) or cash receipt (cash inflow). Cash-flow Sign Convention Transaction initial subsequent cash flow cash flow investment outflow inflow (negative) (positive) loan inflow outflow (positive) (negative) Example What amount must be invested now in a savings account earning 8% compounded monthly to accumulate a total of $10,000 after 31/2 years? j=8% m=12 s=$10,000 i=j/m=0.666666666% term= 31/2 years n=12*3.5=42 Example George invested $5000 at 9.25% compounded quarterly. After 18 months, the rate changed to 9.75% compounded semiannually. What amount will George have accumulated 3 years after the initial investment? Solution: 0 represents the time when the initial investment made. From 0 to 18 months j1=9.25% m1=4 i1=9.25%/4=2.3125% (per quarter) p1=$5000 n1=18/3=6 From