Sharp EL-733 EL-733A Operation Manual - Page 42

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u 3. You know the various parts of the cash-flow schedule and how they correspond to the five TVM keys on your EL-733A(Page 39). O 4. You know how to compute payments, present values, future values, and interest rates, and you have some feel for, or are becoming less intimidated by, the terminology that goes along with these values in various fields of finance. Savings, IRA's and Annuities Example: How much per month do you need to put away for the next twenty years if you wish to draw $3500 per month for the following thirty years? Assume a rate of return of 11% APR. Solution: Work this problem backwards in two parts. The cash-flow schedule for the first part looks like this: PMT = 3'500.00 FV = 0 As a quick example of the calculation of compound interest accumulation on a savings account, look at the following: Example: How much money will you have at the end of 10 years if you put $10'000 in a savings acount and the interest rate is 9% APR compounded monthly? Assume you leave both the principal and interest in the account. (Mode: FIN) Keystrokes: 1010001+/-1 Pv 10 I2ndF11- 2 E) 9 [2ndf)[÷121M 0 IfIkAl) [cowl Result: 24'513.57 1 tttt PV =? 1354t35:3513515:35 94136: i=11+12 n=30 X 12 You need to calculate the amount that needs to be in an 11% account up front (the PV) if you wish to draw $3'500 per month for 30 years. This is a PV calculation like those on page 50. Make sure you are not in BGN mode: (Mode: FIN) 3'500 M 30 FAR x1) NJ 11 [2ndF] M PmPI PV Result: -367522.21 The next step is to figure out what you need to put away each month for the next 20 years to 81

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3.
You
know
the
various
parts
of
the
cash
-flow
schedule
and
how
they
correspond
to
the
fi
ve
TVM
keys
on
your
EL-733A(Page
39
).
O
4.
You
know
how
to
compute
payments,
present
values,
future
values,
and
interest
rates,
and
you
have
some
feel
for,
or
are
becoming
less
intimidated
by,
the
terminology
that
goes
along
with
these
values
in
various
fi
elds
of
fi
nance.
Savings,
IRA's
and
Annuities
As
a
quick
example
of
the
calculation
of
compound
interest
accumulation
on
a
savings
account,
look
at
the
following:
Example:
How
much
money
will
you
have
at
the
end
of
10
years
if
you
put
$10'000
in
a
savings
acount
and
the
interest
rate
is
9%
APR
compounded
monthly?
Assume
you
leave
both
the
principal
and
interest
in
the
account.
(Mode:
FIN)
Keystrokes:
10
1
0001+/-1
Pv
10
I2ndF11
-
2
E)
9
[2ndf)[÷121M
0
IfIkAl)
[cowl
Result:
24'513.57
Example:
How
much
per
month
do
you
need
to
put
away
for
the
next
twenty
years
if
you
wish
to
draw
$3500
per
month
for
the
following
thirty
years?
Assume
a
rate
of
return
of
11%
APR.
Solution:
Work
this
problem
backwards
in
two
parts.
The
cash
-flow
schedule
for
the
fi
rst
part
looks
like
this:
FV
=
0
PMT
=
3'500.00
1
tttt
1354t35:3513515:35
4
9136:
i=11+12
PV
=?
n=30
X
12
You
need
to
calculate
the
amount
that
needs
to
be
in
an
11%
account
up
front
(the
PV)
if
you
wish
to
draw
$3'500
per
month
for
30
years.
This
is
a
PV
calculation
like
those
on
page
50.
Make
sure
you
are
not
in
BGN
mode:
(Mode:
FIN)
3'500
M
30
FAR
x1)
NJ
11
[2ndF]
M
PV
PmPI
Result:
—367522.21
The
next
step
is
to
fi
gure
out
what
you
need
to
put
away
each
month
for
the
next
20
years
to
81