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Time Value of Money Solution Grid

 Self-Paced Overview

Using the Solution Grid

Problem:

If you invest $10,000 today and want to have $40,000 in 8 years, what rate of interest will you have to earn?

The solution grid:

P/YR
1
N I/YR PV PMT FV
8 ? 10,000 +/- 0 40,000

The answer is:  18.92%

The calculator keystrokes:

C
  C ALL
1    P/YR
8  N
1  0  0  0  0  +/  PV
0  PMT
4  0  0  0  0  FV
I/YR
CE/C
2nd CLR TVM
2nd P/Y  1  ENTER  2nd QUIT
8  N
1  0  0  0  0  +/  PV
0  PMT
4  0  0  0  0  FV
CPT  I/Y

Remember that you have to identify your cash inflow and outflow. Should you forget, your calculator will return "no Solution" instead of the answer.  (TI BAII Plus: Error 5)

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