Using graphing calculator Ti-83 to solve compounding ...



Using graphing calculator Ti-83 to solve compound interest Investment problems

The following are the financial math calculator moves to follow on a Ti-83 graphing calculator.

• Press APPS

• Go to 1: finance Press ENTER

• Go to 1: TVM Solver…. Press ENTER

• Fill in the known values for each letter given in the question

• When solving for a letter, go to the letter and press ALPHA ENTER to get the answer

• Ensure under PMT: END is high lighted at the bottom of screen

Note:

• Enter interest rate as a %. (the calculator will divide it by 100)

• Enter PV (principal) as a negative number. Enter FV (future value) as a positive number. Enter PMT (regular payment) as a negative number when doing regular payments

o Most financial calculators (and spreadsheets) follow the Cash Flow Sign Convention. This is simply a way of keeping the direction of the cash flow straight. Cash inflows are entered as positive numbers and cash outflows are entered as negative numbers. An investment is cash outflow (since it is money the investor pays out) and the future value is cash inflow (since it is money that the investor will receive).

o Change the sign using the (-) key , never use the subtraction key –

o You absolutely must enter your numbers according to the cash flow sign convention. If you don't make either the PV or FV a negative number (and the other positive), then you will get ERR: message

• Always make sure that the P/Y (payments per year) and C/Y (compounding per year) are set to 1 if compounded annually, set to 2 if compounded semi-annually, set to 4 if compounded quarterly or set to 12 if compounded monthly, etc.. Be sure that any variables not in the problem are set to 0, otherwise they will be included in the calculation.

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Calculating Accumulated interest on loans with Regular Payments

The following are the financial math calculator moves to follow on a Ti-83 graphing calculator.

• Press APPS

• Go to 1: finance Press ENTER

• Go to 1: TVM Solver…. Press ENTER

• Fill in the known values for each letter given in the question

• When solving for a letter, go to the letter and press ALPHA ENTER to get the answer

Ensure under END is high lighted at the bottom of screen

N = # of payments throughout loan (ROUND UP)

I% = annual interest rate written as a %

PV = Principal of loan (MUST BE NEGATIVE sign!!!!!)

PMT = Regular payment amount (Positive sign!!!!!)

FV = usually put 0 (Positive sign!!!!!) (balance of loan as you pay it off)

This is not the total repayment of loan

P/Y = Payments per year

C/Y = Frequency that interest is compounded per year

PMT: END

Find accumulated Interest on calculator

• Enter the loan details into the TVM Solver.

• Calculate the number of payments (N) or whatever is unknown

• Then immediately click APPS button

• From the Finance menu, scroll down to the ΣInt ( (means sum of interest)

• Press enter and the following message appears ΣInt(

which mean ΣInt(Begin Period, End Period)

• Inside the brackets you will type in ΣInt(1, N) N is the number of payments on the loan

• Press enter and the Sum of the Interest on the loan is calculated for you.

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