7.12: Video Activity

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Time Value of Money Calculations with Financial Calculator

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Name and describe the five primary keys on a financial calculator that are used to solve time value of money problems.

Following the instructions laid out in this video, practice calculating the following TVM variables using these inputs:

Find a Future Value (FV): Calculate FV when

/**/{\rm{PV}} = -\text{1,000},\;{\rm{N}} = 5,\;{\rm{I}}/{\rm{Y}} = 4/**/, and /**/{\rm{PMT}} = 0/**/.

Find a Present Value (PV): Calculate PV when

/**/{\rm{FV}} = \text{2,000},\;{\rm{N}} = 7,\;{\rm{I}}/{\rm{Y}} = 5/**/, and /**/{\rm{PMT}} = 0/**/.

Find the Number of Periods (N) when

/**/{\rm{FV}} = \text{5,000,}\;{\rm{PV}} = -\text{3,000},\;{\rm{I}}/{\rm{Y}} = 3/**/, and /**/{\rm{PMT}} = 0/**/.

Find the Interest Rate (I/Y) when

/**/{\rm{FV}} =\text{6,000},\;{\rm{PV}} = - \text{1,500},\;{\rm{N}} = 10/**/, and /**/{\rm{PMT}} = 2/**/.

Find the Payment (PMT) when

/**/{\rm{FV}} = \text{15,000},\;{\rm{PV}} = -\text{8,000},\;{\rm{N}} = 12,/**/ and /**/ {\rm{I}}/{\rm{Y}} = 4/**/.

Continue to practice using a financial calculator to solve various time value of money problems using different input factors until you feel comfortable with the process of using a calculator to solve TVM problems.

Time Value of Money Using Excel with 10 Examples

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Where within the Excel spreadsheet and its different menus (under what menu button option) can you find the different functions that will enable you to solve for different time value of money factors?

Following the instructions laid out in this video, practice calculating the following TVM variables in Excel.

Find a Future Value (FV): Calculate FV when

/**/\text{PV}=-\text{1,000},\;\text{N}=5,\;\text{I}/\text{Y}=4/**/, and /**/{\rm{PMT}} = 0/**/.

Find a Present Value (PV): Calculate PV when

/**/\text{FV}=\text{2,000},\;\text{N}=7,\;\text{I/Y}=5/**/, and /**/{\rm{PMT}} = 0/**/.

Find the Number of Periods (N) when

/**/\text{FV}=\text{5,000},\;\text{PV}=-\text{3,000},\;\text{I/Y}=3/**/, and /**/{\rm{PMT}} = 0/**/.

Find the Interest Rate (I/Y) when

/**/\text{FV}=\text{6,000},\;\text{PV}=-\text{1,500},\;\text{N}=10/**/, and /**/{\rm{PMT}} = 2/**/.

Find the Payment (PMT) when

/**/\text{FV}=\text{15,000},\;\text{PV}=-\text{8,000},\;\text{N}=12/**/, and /**/{\rm{I/Y}} = 4/**/.

Go back and check the answers to these questions that you ended up with under the video Time Value of Money Calculations with Financial Calculator. You should get the exact same answers when using both methods (calculator and Excel).

Continue to practice using Excel to solve various time value of money problems using different input factors until you feel comfortable with the process of using spreadsheets to solve TVM problems.