Chapter 14: Applications 253
Getting Started: Computing Compound Interest
At what annual interest rate, compounded monthly, will 1,250 accumulate to 2,000 in 7 years?
Note: Because there are no payments when you solve compound interest problems, PMT must be
set to
0 and P/Y must be set to 1.
1. Press Œ Í to select 1:Finance from the
APPLICATIONS menu.
2. Press Í to select 1:TVM Solver from the CALC
VARS
menu. The TVM Solver is displayed.
3. Enter the data:
N=7
PV=M1250
PMT=0
FV=2000
P/Y=1
C/Y=12
4. Move the curstor to æ and press ƒ \.
YYou need to look for an interest rate of 6.73% to grow
1250 to 2000 in 7 years.
Using the TVM Solver
Using the TVM Solver
The TVM Solver displays the time-value-of-money (TVM) variables. Given four variable values,
the TVM Solver solves for the fifth variable.
The
FINANCE VARS menu section describes the five TVM variables (Ú, æ, PV, PMT, and FV) and
P/Y and C/Y.
PMT: END BEGIN in the TVM Solver corresponds to the FINANCE CALC menu items Pmt_End
(payment at the end of each period) and
Pmt_Bgn (payment at the beginning of each period).
To solve for an unknown
TVM variable, follow these steps.
1. Press Œ Í Í to display the TVM Solver. The screen below shows the default
values with the fixed-decimal mode set to two decimal places.
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