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Time Value of Money Solution Grid

 Self-Paced Overview

Using the Solution Grid

Problem:

You deposit $100,000 today and can earn 3% interest, compounded quarterly. How much will you have in 10 years?

This problem is a good example of why you should read the problem thoroughly, and make sure you know what you're being asked to do.

Notice that interest is compounded quarterly. As discussed earlier in this overview, when setting Periods per Year, if the calculation involves annual interest, P/YR is one. For semiannual interest, P/YR is two. For quarterly interest, P/YR is four, and for monthly interest, P/YR is 12. So in this case, P/YR is four.

Also, since interest is compounded quarterly, or four times annually, the number of periods has to be adjusted. This is done by multiplying the number of years (10) by the times per year interest is compounded (four). So in this case, N is 40.

The solution grid:

P/YR
4
N I/YR PV PMT FV
40 3 100,000 +/- 0 ?

The answer is:  $134,834.86

The calculator keystrokes:

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

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