HP HP12C hp 12c_user's guide_English_E_HDPMBF12E44.pdf - Page 11
Making Financial, Calculations Easy - 12c financial calculator
UPC - 882780792104
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Making Financial Calculations Easy Before you begin to read through this handbook, let's take a look at how easy financial calculations can be with your hp 12c. While working through the examples below, don't be concerned about learning how to use the calculator; we'll cover that thoroughly beginning with Section 1. Example 1: Suppose you want to ensure that you can finance your daughter's college education 14 years from today. You expect that the cost will be about $6,000 a year ($500 a month) for 4 years. Assume she will withdraw $500 at the beginning of each month from a savings account. How much would you have to deposit into the account when she enters college if the account pays 6% annual interest compounded monthly? This is an example of a compound interest calculation. All such problems involve at least three of the following quantities: z n: the number of compounding periods. z i: the interest rate per compounding period. z PV: the present value of a compounded amount. z PMT: the periodic payment amount. z FV: the future value of a compounded amount. In this particular example: z n is 4 years × 12 periods per year = 48 periods. z i is 6% per year ÷ 12 periods per year = 0.5% per period. z PV is the quantity to be calculated - the present value when the financial transaction begins. z PMT is $500. z FV is zero, since by the time your daughter graduates she (hopefully!) will not need any more money. To begin, turn the calculator on by pressing the ; key. Then, press the keys shown in the Keystrokes column below.* * If you are not familiar with the use of an hp calculator keyboard, refer to the description on pages 16 and 17. 11 File name: hp 12c_user's guide_English_HDPMBF12E44 Printered Date: 2005/7/29 Page: 11 of 209 Dimension: 14.8 cm x 21 cm