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Time Value of Money

 Self-Paced Overview

Using a Financial Calculator

Example 3:

What would you have to deposit today to have $50,000 in eight years if you can earn 6% interest, compounded semiannually?

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 present value of $50,000?

  3. Clear the calculator.

    C    C ALL

  4. Input the known value.

    5  0  0  0  0  FV

  5. Input the number of compounding periods per year.

    2    P/YR

  6. Input the annual interest rate.

    6  I/YR

  7. Input the total number of compounding periods.

    1  6  N

  8. Request the unknown.

    PV

Answer: $31,158.35

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