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Time Value of Money

 Self-Paced Overview

Using a Financial Calculator

Example 2:

How much would you have in four years if you deposit $40,000 at the beginning of each year for four years and interest is 10% compounded annually?

Using an HP 10bII+

  1. Read the problem thoroughly.

    Remember cash outflows carry a minus sign.

  2. Make sure what is being asked in the problem.

    What is the future value of a $40,000 four-year annuity due?

  3. Clear the calculator.

    C    C ALL

  4. Input the known value.

    4  0  0  0  0  +/  PMT

  5. Input the number of compounding periods per year.

    1    P/YR

  6. Input the annual interest rate.

    1  0  I/YR

  7. Input the total number of compounding periods.

      Beg/End  4  N

  8. Request the unknown.

    FV

Answer: $204,204.00

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