HP HP12C hp 12c_user's guide_English_E_HDPMBF12E44.pdf - Page 34

34 Section 3: Basic Financial Functions Keystrokes 7¼ 450Þ$ fÏ + Display 7.00 -450.00 5.25 455.25 Stores the annual interest rate. Stores the principal. Accrued interest, 360-day basis. Total amount: principal plus accrued interest. Example 2: Your friend agrees to the 7% interest on the loan from the preceding example, but asks that you compute it on a 365-day basis rather than a 360-day basis. What is the amount of accrued interest he will owe you in 60 days, and what is the total amount owed? Keystrokes 60n 7¼ 450Þ$ Display 60.00 7.00 -450.00 If you have not altered the numbers in the n, i, and PV registers since the preceding example, you may skip these keystrokes. fÏd~ + 5.18 455.18 Accrued interest, 365-day basis. Total amount: principal plus accrued interest. Financial Calculations and the Cash Flow Diagram The concepts and examples presented in this section are representative of a wide range of financial calculations. If your specific problem does not appear to be illustrated in the pages that follow, don't assume that the calculator is not capable of solving it. Every financial calculation involves certain basic elements; but the terminology used to refer to these elements typically differs among the various segments of the business and financial communities. All you need to do is identify the basic elements in your problem, and then structure the problem so that it will be readily apparent what quantities you need to tell the calculator and what quantity you want to solve for. An invaluable aid for using your calculator in a financial calculation is the cash flow diagram. This is simply a pictorial representation of the timing and direction of financial transactions, labeled in terms that correspond to keys on the calculator. The diagram begins with a horizontal line, called a time line. It represents the duration of a financial problem, and is divided into compounding periods. For example, a financial problem that transpires over 6 months with monthly compounding would be diagrammed like this: File name: hp 12c_user's guide_English_HDPMBF12E44 Printered Date: 2005/7/29 Page: 34 of 209 Dimension: 14.8 cm x 21 cm