Compounding Term

Ctrm

Calculates the number of compounding periods necessary to increase an investment of present value pv to a future value of fv, at a fixed interest rate of int per compounding period.

This function uses the following memory registers:

You have just deposited $8000 in an account that pays an annual interest rate of 9%, compounded monthly. Given the annual interest rate, you determine that the monthly interest rate is 0.09 / 12 = 0.0075. To calculate the time period necessary to double your investment, put the following values into the first three memory registers:

Click on Ctrm.

92.77

The investment doubles in value in 92.77 months.

Double-Declining Depreciation

Ddb

Calculates the depreciation allowance on an asset for a specified period of time, using the double-declining balance method.

This function uses the following memory registers:

You have just purchased an office machine for $8000. The useful life of this machine is six years. The salvage value after six years is $900. To calculate the depreciation expense for the fourth year, using the double-declining balance method, put the following values into the first four memory registers:

Click on Ddb.

790.12

The depreciation expense for the fourth year is $790.12.

Future Value

Fv

Calculates the future value of an investment based on a series of equal payments, each of amount pmt, at a periodic interest rate of int, over the number of payment periods in the term.

This function uses the following memory registers:

You plan to deposit $4000 in a bank account on the last day of each year for the next 20 years. The account pays 8% interest, compounded annually. Interest is paid on the last day of each year. To calculate the value of your account in 20 years, put the following values into the first three memory registers:

Click on Fv.

183047.86

At the end of 20 years, the value of the account is $183,047.86.

Periodic Payment

Pmt

Calculates the amount of the periodic payment of a loan, where payments are made at the end of each payment period.

This function uses the following memory registers:

You are considering a $120,000 mortgage for 30 years at an annual interest rate of 11.0%. Given the annual interest rate, you determine that the monthly interest rate is 0.11 / 12 = 0.00917. The term is 30 * 12 = 360 months. To calculate the monthly repayment for this mortgage, put the following values into the first three memory registers:

Click on Pmt.

1143.15

The monthly repayment is $1143.15.

Present Value

Pv

Calculates the present value of an investment based on a series of equal payments, each of amount pmt, discounted at a periodic interest rate of int, over the number of payment periods in the term.

This function uses the following memory registers:

You have just won a million dollars. The prize is awarded in 20 annual payments of $50,000 each. Annual payments are received at the end of each year. If you were to accept the annual payments of $50,000, you would invest the money at a rate of 9%, compounded annually.

However, you are given the option of receiving a single lump-sum payment of $400,000 instead of the million dollars annuity. To calculate which option is worth more in today's dollars, put the following values into the first three memory registers:

Click on Pv.

456427.28

The $1,000,000 paid over 20 years is worth $456,427.28 in present dollars.

Periodic Interest Rate

Rate

Calculates the periodic interest necessary to increase an investment of present value pv to a future value of fv, over the number of compounding periods in term.

This function uses the following memory registers:

You have invested $20,000 in a bond. The bond matures in five years, and has a maturity value of $30,000. Interest is compounded monthly. The term is 5 * 12 = 60 months. To calculate the periodic interest rate for this investment, put the following values into the first three memory registers:

Click on Rate.

.00678

The monthly interest rate is 0.678%. The annual interest rate is 0.678% * 12 = 8.14%.

Straight-Line Depreciation

Sln

Calculates the straight-line depreciation of an asset for one period. The depreciable cost is cost - salvage. The straight-line method of depreciation divides the depreciable cost evenly over the useful life of an asset. The useful life is the number of periods, typically years, over which an asset is depreciated.

This function uses the following memory registers:

You have just purchased an office machine for $8000. The useful life of this machine is six years. The salvage value after six years is $900. To calculate the yearly depreciation expense, using the straight-line method, put the following values into the first three memory registers:

Click on Sln.

1183.33

The yearly depreciation expense is $1183.33.

Sum-Of-The-Years'-Digits Depreciation

Syd

Calculates the depreciation allowance on an asset for a specified period of time, using the Sum-Of-The-Years'-Digits method. This method of depreciation accelerates the rate of depreciation, so that more depreciation expense occurs in earlier periods than in later ones. The depreciable cost is cost - salvage. The useful life is the number of periods, typically years, over which an asset is depreciated.

This function uses the following memory registers:

You have just purchased an office machine for $8000. The useful life of this machine is six years. The salvage value after six years is $900. To calculate the depreciation expense for the fourth year, using the sum-of-the-years'-digits method, put the following values into the first four memory registers:

Click on Syd.

1014.29

The depreciation expense for the fourth year is $1014.29.

Payment Period

Term

Calculates the number of payment periods that are necessary during the term of an ordinary annuity, to accumulate a future value of fv, at a periodic interest rate of int. Each payment is equal to amount pmt.

This function uses the following memory registers:

You plan to deposit $1800 in a bank account on the last day of each year. The account pays 11% interest, compounded annually. Interest is paid on the last day of each year. To calculate the time period necessary to accumulate $120,000, put the following values into the first three memory registers:

Click on Term.

20.32

$120,000 accumulates in the account in 20.32 years.