User Guide

Chapter 14: Applications 253

Getting Started: Computing Compound Interest

At what annual interest rate, compounded monthly, will 1,250 accumulate to 2,000 in 7 years?

Note: Because there are no payments when you solve compound interest problems, PMT must be

set to

0 and P/Y must be set to 1.

1. Press Œ Í to select 1:Finance from the

APPLICATIONS menu.

2. Press Í to select 1:TVM Solver from the CALC

VARS

menu. The TVM Solver is displayed.

3. Enter the data:

N=7

PV=M1250

PMT=0

FV=2000

P/Y=1

C/Y=12

4. Move the curstor to æ and press ƒ \.

YYou need to look for an interest rate of 6.73% to grow

1250 to 2000 in 7 years.

Using the TVM Solver

The TVM Solver displays the time-value-of-money (TVM) variables. Given four variable values,

the TVM Solver solves for the fifth variable.

The

FINANCE VARS menu section describes the five TVM variables (Ú, æ, PV, PMT, and FV) and

P/Y and C/Y.

PMT: END BEGIN in the TVM Solver corresponds to the FINANCE CALC menu items Pmt_End

(payment at the end of each period) and

Pmt_Bgn (payment at the beginning of each period).

To solve for an unknown

TVM variable, follow these steps.

1. Press Œ Í Í to display the TVM Solver. The screen below shows the default

values with the fixed-decimal mode set to two decimal places.