Time value of money and financial calculator tutorials
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Time value of money and financial calculator tutorials
Over the years, I have received many questions about financial calculators. I will compile a list of the most frequently asked questions here. Q: My 20b is showing a comma instead of a decimal point. How do I fix this problem? A: This is easily the most commonly asked question. I wish I knew how people got themselves into this…
This article explains how to calculate the call price of a bond with a make-whole call provision using the HP 20b calculator.
Make-whole call provision is beneficial to investors because they get the present value of all remaining cash flows if the bond is called early. The calculation considers the coupon rate, maturity date, and a discount rate based on a Treasury security.
The article provides a step-by-step guide for calculating the call price using both the Time Value of Money (TVM) keys and the Net Present Value (NPV) function on the HP 20b calculator.
This tutorial explains how to amortize a fixed-rate loan using the HP 20b financial calculator. It guides users on calculating the principal and interest for individual payments or a range of payments. The article demonstrates using the calculator’s built-in functions to break down loan payments into principal and interest components and how to determine the remaining balance after each payment. Additionally, it briefly compares this method with using a spreadsheet for creating a full amortization schedule, highlighting the limitations and practical applications of the HP 20b calculator's amortization functions.
Duration and convexity are important numbers in bond portfolio management, but it is far from obvious how to calculate them on the HP 20b. Of course, there are formulas that you can type in (see table below), but they aren’t easy for most people to remember and are tedious to enter. In this article I will show you how you…
One of the key variables in choosing any investment is the expected rate of return. We try to find assets that have the best combination of risk and return. In this section we will see how to calculate the rate of return on a bond investment. If you are comfortable using the TVM keys, then this will be a simple…
A bond is a debt instrument, usually tradable, that represents a debt owed by the issuer to the owner of the bond. Most commonly, bonds are promises to pay a fixed rate of interest for a number of years, and then to repay the principal on the maturity date. In the U.S. bonds typically pay interest every six months (semi-annually),…
Strictly speaking, an annuity is a series of equal cash flows, equally spaced in time. However, a graduated annuity (also called a growing annuity) is one in which the cash flows are not all the same, instead they are growing at a constant rate (any other series of cash flows is an uneven cash flow stream). So, the two types…
Many, perhaps most, time value of money problems in the real world involve other than annual time periods. For example, most consumer loans (e.g., mortgages, car loans, credit cards, etc.) require monthly payments. All of the examples in the previous pages have used annual time periods for simplicity. On this page, I’ll show you how easy it is to deal…
Uneven Cash Flows In the previous section we looked at the basic time value of money keys and how to use them to calculate present and future value of lump sums and annuities. In this section we will take a look at how to use the HP 20b to calculate the present and future values of uneven cash flow streams.…
In the previous section we looked at the basic time value of money keys and how to use them to calculate present and future value of lump sums. In this section we will take a look at how to use the HP 20b to calculate the present and future values of regular annuities and annuities due. A regular annuity is…
The Hewlett Packard 20b Business Consultant is an easy to use, and inexpensive, financial calculator that will serve you well in all finance courses. This tutorial will demonstrate how to use the financial functions to handle time value of money problems and make financial math easy. I will keep the examples rather elementary, but understanding the basics is all that…