How To Use A Finance Calculator – Q&A
Calculators for finances and business are specialist tools. When calculating the rate of return on an investment or loan payments, for instance, they incorporate several essential elements that you won’t find on a standard calculator and make life much simpler.
Future Value: What Is It?
The value of your current financial holdings over time is calculated using the anticipated interest rate or growth rate. It provides you with an estimate of your future financial situation.
How to Use a Financial Calculator to Calculate Future Value
You must enter the following information into a financial calculator to calculate future value:
Periods and Starting Amount
Interest Rate and Amount of Periodic Deposit
To achieve this using a financial calculator, follow these steps:
1. Delete the budgetary calculator
Clear the finance keys by hitting [2nd] and [FV] before we begin. The calculation will be set up for future value in this way. You must always think in terms of months because we pay you monthly.
2. Type the quantity of payments.
This will be the total number of computation periods, or the total number of payments, which in this case is six months. Enter 6 on the calculator by pressing [N].
3. Fill up the Periodic Interest Rate
In our example, we’re using an interest rate of 5% APR. By tapping I/YR and 5/12 on the calculator, input the monthly rate, 5%/12. Your interest will be calculated automatically over a year with this.
4. Type the Monthly Payment Amount.
By typing -$1000 and pressing [PMT], enter the monthly payment amount.
Due to the fact that payments reflect cash outflows for the investor, payment amounts are shown as negative values.
5. Type the amount in present value.
Press the [PV] key after entering the negative $10,000 present value.
Due to the fact that payments reflect cash outflows for the investor, present value amounts are shown as negative values.
6. Use the financial calculator to solve for future value.
Simply press the [CPT] key followed by [FV] to calculate FV. The correct response is $16,315.47.
If you’re off by a few pennies, it’s likely because your periodic interest rate had fewer decimal places.
What if my baii plus is not accurately calculating?
Some calculators, such as the Texas Instruments BAII Plus financial calculator, demand that you enter some values as negative numbers. You won’t need to do this with some calculators, especially internet calculators or some mobile apps.
This is due to the fact that some calculators distinguish between money inflows and outflows. For instance, if you invest $20,000, this is an outflow and needs to be represented as a negative figure.
How to figure out loan repayments
You will need to know the loan amount, interest rate, period of the loan, and payment schedule in order to compute loan payments on a financial calculator.
As an illustration, you would conduct the following to get the monthly payment for a $10,000 loan with a five-year term and a 5% yearly interest rate:
1. type the loan balance
Enter 10,000 and select the PV button to calculate the loan’s present value.
2. type the interest rate in.
To get 4.1666667, the yearly interest rate divided by 12 months, enter 5/12 and hit =. To enter the interest rate, click the I% button.
3. type the quantity of payments.
Enter 5 x 12 to get 60, or five years’ worth of payments every month. To enter 60 as the number of payments, use the N button.