How to use a financial calculator | time value of money compound interest, npv Tutorial


Alright guys so before we get started on any financial calculations I needed to show you the basic functions of a financial calculator another one. I use is HP 10 B 2 plus, and I really like it it has a lot of functions on it And it’s not as complicated as it may appear at the beginning, so let me just go through the basic functions I have mine set to 4 decimal places and the reason why is your financial? Calculations are gonna be actually more accurate if it’s set to 4 so if it’s set to 4 places because I have taken Tests where I’ve had it set to 2 places And it wasn’t quite right and I got the answers wrong so do 4 do 4 decimal places and you can change that by going shift equals and then to like I want two decimal places or you can do shift equals 9 9 decimal places so it doesn’t matter what numbers you want So I’m going to go back to 4 decimal places shift equals 4 ok so that is basically how you set the decimals and then Again, you’re gonna be using this button a lot shift It there’s gonna be a lot of different commands on here that require the shift button So when doing financial calculations you have to pay attention to the word problem or whatever? It is you’re trying to calculate a lot of problems that say Annually or monthly so it all depends on how you want to Figure out the payments or figure out the present value, or we’ll get into that in a minute, but how you do it That’s shift clear all meaning all the memories wiped you just do shift Clairol and then To set it to say annual payments Which is the basic which is the basic one everyone goes to is one shift payment, okay? and that’s that you sets your calculator to Just doing annual calculations now What if you wanted to do monthly calculations there 12 months in a year you do 12? Shift payment and it sets it to 12th now watch Say, I want to calculate a payment for something that is three years long all I have to do guys is this 3 shift n Do you see how that turned into 36? three times 12 is 36 It already did it for you Because I hit the shift button it already did it for you because I have it on 12:00 shift payment I already have it on the monthly calculation So let me go back to one shift payment and I cleared it all if I did that twelve shift in it would still be twelve if It was on the annual calculation So that is something you want to pay attention to because you will be getting monthly and you’re beginning annually and he’ll be getting Semi-annually, so let me do semi-annually for you that would be to shift payment and say it’s three years three shift and six This button right here is going to be your years or your months. That’s the N? This one right here is gonna be your percentage like what is your annual rate of return? What is your yield to maturity? You’ll you’ll see that quite a few problems this one right here is present value How much money at the beginning? Do you have now not every not everybody has a To figure that one out, and I will show you in future videos But that’s basically what you have at the beginning of in Today’s dollars today’s date and the reason why it’s negative guys the reason why I always put like say 800 Negative is because that is the money you are putting into it expecting to get a return So just remember that either present value or payment will always have a negative input So then the next button here is payment that is how much you are paying or you are being paid it depends on the question but That’s gonna. Be monthly annually or Semi-annually usually And then future value is how much is the value of your investment or whatever going to be in the future? When you calculate the year the percentage? What you have at the beginning and what your going to be paying extra into so that’s just to calculate the future value So those are the five major buttons that you need to know for a financial calculator

Paul Whisler

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