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: How can I extract values from the TVM Solver so that I can use them in formulas? A: Excellent question. When you press the APPS button and then go into the Finance menu, you will be…
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…
This article explains how to calculate bond duration and convexity using a TI 83 Plus calculator. It highlights the complexity of using traditional formulas and presents an approximation method that involves calculating bond prices at current, slightly higher, and slightly lower yields. This method is accurate to multiple decimal places, simplifying the process. The article provides step-by-step instructions for storing and recalling bond prices, and emphasizes that these calculations can be made on coupon payment dates. It concludes by noting that the approximations are sufficiently accurate for practical use and can be adapted for other dates using dirty prices.
This tutorial explains how to create an amortization schedule for a fixed-rate loan using a TI 83 Plus calculator. The tutorial covers entering loan details into the TVM Solver, calculating monthly payments, and breaking down each payment into interest and principal. It also demonstrates using built-in functions (ΣInt, ΣPrn, and Bal) to automate calculations and create a complete amortization table. The tutorial includes tips for adjusting loan terms and efficiently navigating the amortization schedule. For those preferring spreadsheets, a separate tutorial is recommended.
In recent years, bond issuers have changed from the traditional call schedule to a “make-whole” type of call. Generally, this is good for investors as it makes it less likely that high interest bonds will be called. If it is called, then they are “made whole” because they are paid the present value of the remaining cash flows. In a…
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 Solver, 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),…
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 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 and regular annuities. In this section we will take a look at how to use the TI 83 Plus to calculate the present and future values of uneven…
Part 2 of a TI-83 calculator tutorial on calculating money value over time. It covers how to find present and future values of annuities (regular payments) and lump sums using the built-in TVM Solver app. The tutorial explains different annuity types (regular and due) and how to solve for missing variables like payment amount, interest rate, or number of periods. It also touches on perpetuities (infinite payments) and how to approximate their present value with the calculator.
This is the first part of a TI-83 calculator tutorial on performing time value of money calculations. It covers finding future and present values of lump sums using the built-in TVM Solver app. The tutorial explains how to enter data considering the calculator's cash flow sign convention and solve for missing variables like the number of periods or interest rate. It also teaches how to adjust the calculator's decimal places for better viewing.
In this article, we explore the financial functions available in the TI 83, TI 83 Plus, and TI 84 Plus calculators. Key functions such as tvm_FV, tvm_PV, and tvm_Pmt allow users to solve for future value, present value, and payment amounts in financial problems. Each function corresponds to a menu number for quick access. For instance, tvm_PV retrieves the present value stored in the TVM Solver. Functions like NPV and IRR calculate net present value and internal rate of return. The Finance menu offers a comprehensive toolset for managing time value of money, loans, and investment calculations.