Sharp EL733A EL-733A Operation Manual - Page 31

Cirri

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Solution: Here's the situation illustrated on a cash-flow schedule: 700'000 [+/-i ®IM Result: -8'582.51 PV =775'000 i= 1 n = 5 x 12 1234 5 t5 .156 1,571,58 I5B to Notice that the PV, PMT, and order in which you input the values FIT is not important. All you are of n, doing when you press one of those keys is storing a number in a register. Only when you precede one of those keys by pressing LCL+A)P does the calculator do any computing. When you compute one of the five TVM values, the calculator bases its answer on the numbers in the other four TVM registers. PMT = -? FV = -700'000 The cash-flow schedule above is drawn according to your perspective. You move into the building on day-one, so the value of the building shows as a positive. You are responsible for making the the payments, so they show as a negative (including the buyout figure at the end). As usual, once you boil the words down to a cash-flow schedule, the keystroke procedure is not very involved. Notice that the first payment on the cash-flow schedule occurs at the beginning of the time line. That means this calculation requires BGN mode: (Mode: FIN) [II (to turn on the BGN display indicator) 775'000 El 5 Fell rx2 E) r I : INTEREST RATE CALCULATIONS The interest rate on a loan or investment with a regular payment stream can be calculated by pressing IM . If the cash-flows are irregular or uneven, the Discounted Cash-Flow Analysis function CIRRI (described starting on page 115) is generally required for a solution. Interest calculations are typically used to answer questions that begin "what return am I getting if...?" or "what does the interest rate have to change to in order for...?" or "what is the real interest rate on this...?" It is a valuable function that often is not taken to its full advantage. The (-1 key always expects and computes a periodic rate. If you want to see the APR, you have to multiply the result by the number of periods in a year (12 for monthly periods, 4 for quarterly periods, etc). Example: You are selling one of your rental properties for a price of $75'000. A propective buyer approaches you with $5,000 for a down payment and the ability to pay taxes, insurance, plus $700 dollars

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Solution:
Here's
the
situation
illustrated
on
a
cash
-flow
schedule:
PV
=775'000
i=
1
n
=
5
x
12
1
2
3
4
5
PMT
=
-?
t5
.
156
1
,
571
,
58
I5B
to
FV
=
-700'000
The
cash
-flow
schedule
above
is
drawn
according
to
your
perspective.
You
move
into
the
building
on
day
-one,
so
the
value
of
the
building
shows
as
a
positive.
You
are
responsible
for
making
the the
payments,
so
they
show
as
a
negative
(including
the
buyout
fi
gure
at
the
end).
As
usual,
once
you
boil
the
words
down
to
a
cash
-flow
schedule,
the
keystroke
procedure
is
not
very
involved.
Notice
that
the
fi
rst
payment
on
the
cash
-flow
schedule
occurs
at
the
beginning
of
the
time
line.
That
means
this
calculation
requires
BGN
mode:
(Mode:
FIN)
[II
(to
turn
on
the
BGN
display
indicator)
775'000
El
5
Fell
rx2
E)
700'000
[+/-i
®IM
Result:
—8'582.51
Notice
that
the
order
in
which
you
input
the
values
of
n,
PV,
PMT,
and
FIT
is
not
important.
All
you
are
doing
when
you
press
one
of
those
keys
is
storing
a
number
in
a
register.
Only
when
you
precede
one
of
those
keys
by
pressing
LC
L)
+AP
does
the
calculator
do
any
computing.
When
you
compute
one
of
the
fi
ve
TVM
values,
the
calculator
bases
its
answer
on
the
numbers
in
the
other
four
TVM
registers.
r
I
:
INTEREST
RATE
CALCULATIONS
The
interest
rate
on
a
loan
or
investment
with
a
regular
payment
stream
can
be
calculated
by
pressing
IM
.
If
the
cash
-flows
are
irregular
or
uneven,
the
Discounted
Cash
-Flow
Analysis
function
CIRRI
(described
starting
on
page
115)
is
generally
required
for
a
solution.
Interest
calculations
are
typically
used
to
answer
questions
that
begin
"what
return
am
I
getting
if...?"
or
"what
does
the
interest
rate
have
to
change
to
in
order for...?"
or
"what
is
the
real
interest
rate
on
this...?"
It
is
a
valuable
function
that
often
is
not
taken
to
its
full
advantage.
The
(
-1
key
always
expects
and
computes
a
periodic
rate.
If
you
want
to
see
the
APR,
you
have
to
multiply
the
result
by
the
number
of
periods
in
a
year
(12
for
monthly
periods,
4
for
quarterly
periods,
etc).
Example:
You
are
selling
one
of
your
rental
properties
for
a
price
of
$75'000.
A
propective
buyer
approaches
you
with
$5
,
000
for
a
down
payment
and
the
ability
to
pay
taxes,
insurance,
plus
$700
dollars