Sharp EL733A EL-733A Operation Manual - Page 27

Explanation

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PV CALCULATIONS Example: Referring to the last example (and with your calculator set to FIN mode and the display at (--) El), the buyer tells you that an affordable payment on the mortgage loan (which doesn't include taxes and insurance) would be right around $800.00. What does the price of the house have to be to reduce the payment from I $859.85 to 800.00? Keystrokes: 800 f+/-I M W 12000 E Result: 99456.61 Explanation: The new situation looks like this on a cash-flow schedule: 1 PV=? you don't have to rekey everything. That is the real beauty of playing "what if' on the EL-733A. You can ask yourself questions like, "What if the payment changes to 800.00; how does that affect the PV?" and, "What if the interest rate changes to 11.2% APR; how does that affect the payment?" And the answers to those questions are just a few keystrokes away. EXAMPLES OF PV AND PMT CALCULATIONS Example: You are in the market for a new car. You are going to trade in your old car and you can afford about a $300 per month car payment . The interest rates are at about 12% APR. What can you afford to borrow on a car if you get a 4 year loan? How about a 5 year loan? Solution: The cash-flow schedule for the 4 year loan looks • like this: i =10.5-i- 12 I), n=30 x 12 FV = 0 'Mtn i3,54t5t51:57t51:51:61 PMT = -800.00 Now you know the payment (PMT is specified to be -800.00), and you need to calculate a new present value (PV). To this new PV, you need to add the amount of the down payment to arrive at the desired price of the house. Once you have a TVM situation keyed in, if you want to make just one change to see how it affects another value, w PV = ? = 12 + 12 =1% per month n=4 x12 FV 0 tHl 143 14, 4 jer15 PMT = -300.00 1:711;18 The amount (PV) that you borrow will be completely paid off WV = 0) in 48 months (n = 48) at $300.00 per month (PMT = -300.00). The interest rates you estimate to be around 12% APR 51

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I),
PV
CALCULATIONS
Example:
Referring
to
the
last
example
(and
with
your
calculator
set
to
FIN
mode
and
the
display
at
(--)
El),
the
buyer
tells
you
that
an
affordable
payment
on
the
mortgage
loan
(which
doesn't
include
taxes
and
insurance)
would
be
right
around
$800.00.
What
does
the
price
of
the
house
have
to
be
to
reduce
the
payment
from
I
$859.85
to
800.00?
Keystrokes:
800
f+/
-I
M
W
12000
E
Result:
99456.61
Explanation:
The
new
situation
looks
li
ke
this
on
a
cash
-flow
schedule:
1
PV=?
i
=10.5-i-
12
n=30
x
12
FV
=
0
'Mtn
i3
,
54t5t51:57t51:51:61
PMT
=
-800.00
Now
you
know
the
payment
(PMT
is
specified
to
be
—800.00),
and
you
need
to
calculate
a
new
present
value
(PV).
To
this
new
PV,
you
need
to
add
the
amount
of
the
down
payment
to
arrive
at
the
desired
price
of
the
house.
Once
you
have
a
TVM
situation
keyed
in,
if
you
want
to
make
just
one
change
to
see
how
it
affects
another
value,
w
you
don't
have
to
rekey
everything.
That
is
the
real
beauty
of
playing
"what
if'
on
the
EL
-733A.
You
can
ask
yourself
questions
like,
"What
if
the
payment
changes
to
800.00;
how
does
that
affect
the
PV?"
and,
"What
if
the
interest
rate
changes
to
11.2%
APR;
how
does
that
affect
the
payment?"
And
the
answers
to
those
questions
are
just
a
few
keystrokes
away.
EXAMPLES
OF
PV
AND
PMT
CALCULATIONS
Example:
You
are
in
the
market
for
a
new
car.
You
are
going
to
trade
in
your
old
car
and
you
can
afford
about
a
$300
per
month
car
payment
.
The
interest
rates
are
at
about
12%
APR.
What
can
you
afford
to
borrow
on
a
car
if
you
get
a
4
year
loan?
How
about
a
5
year
loan?
Solution:
The
cash
-flow
schedule
for
the
4
year
loan
looks
•
like
this:
PV
=
?
=
12
+
12
=1%
per
month
n=4
x12
FV
0
tHl
143
14
,
4
je
r
15
1:7
1
1;18
PMT
=
-300.00
The
amount
(PV)
that
you
borrow
will
be
completely
paid
off
WV
=
0)
in
48
months
(n
=
48)
at
$300.00
per
month
(PMT
=
—300.00).
The
interest
rates
you
estimate
to
be
around
12%
APR
51