Sharp EL-733 EL-733A Operation Manual - Page 19

.The

number

94.89

(in

[iFffl

FAH

El

format)

should

be

showing

in

your

display.

As

long

as

you

stay

in

FIN

mode,

the

numbers

in

all

the

active

registers

will

be

preserved,

even

when

you

turn

off

the

calculator.

Those

numbers

will

only

change

when

you

change

them

by

storing

or

calculating

a

new

number

in

that

register

or

if

you

clear

those

registers

by

pressing

I2ndFl

.

But

storing

and

recalling

is

not

the

main

subject

of

interest

here.

Now

that

you

have

the

basic

picture

of

FIN

mode

down,

let's

look

at

a

fine

discussion

on

the

basics

of...

Financial

Calculations

A

fi

nancial

calculation

is,

in

general,

a

calculation

that

involves

money

and

time.

Money

accumulates

interest

as

time

passes,

and,

given

some

known

situation,

it

is

your

job

(along

with

our

EL

-733A)

to

determine

the

unknowns

that

may

arise.

The

EL

-733A

is

equipped

to

calculate

any

unknown

value

that

arises,

provided

it

is

correctly

supplied

with

the

knowns.

Whether

you

want

to

calculate

a

mortgage

payment

or

analyze

an

investment

with

irregular

cash

-flows,

the

EL

-733A

has

all

the

tools

you

need

to

do

the

calculation.

Ensuring

that

you

are

using

the

tools

simply

and

correctly

is

the

goal

of

the

explanation

in

the

remainder

of

this

chapter.

First,

take

a

little

time

to

look

over

the

background

information

that

follows.

There

are

as

many

different

financial

languages

as

there

are

fi

nancial

fi

elds.

So,

this

background

information

simplifies

the

financial

language

and

some

of

the

fi

nancial

concepts

down

to

pictures

and

the

simple

terms

(abbreviations)

that

are

printed

on

the

face

of

the

EL

-733A.

34

SIMPLE

INTEREST

There

are

two

types

of

interest,

simple

and

compound.

Compound

interest

is

the

most

common

of

the

two

in

these

modern

times,

and

it

is

the

type

of

interest

that

the

EL

-733A

fi

nancial

functions

are

designed

around.

Simple

interest

is

rare,

and

it

is

not

complicated

mathematically,

so

there

is

no

need

for

special

functions

on

the

calculator

to

handle

it.

Because

simple

interest

is

rarely

used

ahymore

(except

perhaps

on

personal

loans

from

relatives

and

other

special

situations),

it

is

not

a

big

subject

in

this

book.

However,

simple

interest

is

closely

related

to

compound

interest,

and

it

is

definitely

worthwhile

to

spend

a

few

moments

for

a

brief

examination

of

simple

interest.

If

you

were

to

borrow

$1

1

000

for

three

years

at

15%

simple

interest,

at

the

end

of

those

three

years

you

would

be

responsible

for

paying

back

$1'150

(150

is

15%

of

1000).

Generally,

simple

interest

is

not

very

time

dependent.

The

term

and

the

amount

of

interest

are

negotiated

and

set

at

the

beginning

of

the

contract.

But

simple

interest

is

not

very

flexible.

What

if

one

year

down

the

road

you

wanted

to

pay

back

$250

of

that

$1000

loan?

Shouldn't

that

reduce

the

amount

of

interest

you

are

responsible

for

paying?

Well,

if

you

start

making

accommodations

for

things

like

early

payments,

you

are

introducing

a

time

dependence.

The

amount

of

interest

you

owe

depends

on

the

amount

of

time

you

hold

the

money.

At

that

point,

you

are

getting

close

to

defining

compound,

interest.

HOW

COMPOUND

INIEREST

WORKS

Compound

interest

is

interest

that

accumulates

at

a

predefined

rate

on

a

periodic

basis.

If

you

deposit

some

money

in

a

passbook

savings

account

at

a

bank,

chances

.35

rai

I

I

I

iti

F

Sharp EL-733 EL-733A Operation Manual - Page 19

iFffl - financial calculator el 733a

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