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Financial Calculators

Financial Calculators. ILX Lightwave May 14, 2003. Marsha A. Goetting Ph.D., CFP ® , CFCS. Professor & Extension Family Economics Specialist Department of Agricultural Economics & Economics. How many of you have used a financial calculator?????.

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Financial Calculators

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  1. Financial Calculators ILX Lightwave May 14, 2003

  2. Marsha A. Goetting Ph.D., CFP®, CFCS Professor & Extension Family Economics Specialist Department of Agricultural Economics & Economics

  3. How many of you have used a financial calculator?????

  4. Everyone can learn to use a financial calculator

  5. PurposeExperience How Financial Calculator Can Help You Make Deci$ion$ About Your Finances

  6. Savings & Investments

  7. Credit

  8. House Buying

  9. Car Purchase

  10. College Education

  11. Retirement Planning

  12. Financial Calculator • Texas Instruments BA-35 Solar Business Analyst • Cost about $20 at most discount stores

  13. Introduction • Getting Acquainted with your Financial Calculator

  14. Turn on CE/C Fix MODE AC/ON 2nd CPT x 12 ¸ 12 PV PMT N % i FV

  15. Financial Mode • If FIN is not lower left corner • Press CPT AC/ON MODE Fin 0.

  16. Decimal Function Fix • Press 2nd CPT 2 FIN 0.00 2nd

  17. Clearing Screen/Display • Press key once • Clears Display • Corrects Incorrect Entries • Clears word “Error” CE/C

  18. Clearing Financial Registers CMR • Press key • Clears numbers in registers & display 2nd CE/C CE/C N %i PV PMT FV

  19. Finance Keys N Number of Periods Interest Rate Payment Amount % i PMT

  20. Finance Keys PV Present Value Future Value Compute key FV CPT

  21. Lump Sum Savings

  22. Finance Key PV Present Value Value of the $avings you have today

  23. How much will $10,000 grow to? PV

  24. Future Value $10,000 • Clear registers 2nd CE/C CE/C • Enter PV 10,000 PV • Enter # Periods 20 N • Enter % Rate 3 %i • CPT FV18,061.11

  25. Future Value $15,000 • Clear registers 2nd CE/C CE/C • Enter PV 15,000 PV • Enter # Periods 5 N • Enter % Rate 6.25 %i • CPT FV 20,311.22

  26. Future Value $50,000 • Clear registers 2nd CE/C CE/C • Enter PV 50,000 PV • Enter # Periods 40 N • Enter % Rate 5 %i • CPT FV351,999.44wait

  27. What if ????? • You want to know what the amount will grow to in 15 years instead of 40….just change the N

  28. Future Value 15 years • Clear registers 2nd CE/C CE/C • Enter PV 50,000 PV • Enter # Periods15 N • Enter % Rate 5 %i • CPT FV 103,946.41

  29. The difference • 40 yrs = $351,999.43 • 15 yrs = $103,946.41 $248,053.02

  30. Lump Sum Savings

  31. Solving for Future Value of AnnualRegular Deposits

  32. CDs, IRAs, Passbook

  33. Payments (Deposits) • Enter deposit amount as a negative value • 2,000 • Screen: -2,000.00 +/- PMT

  34. IRA(single person) • $2,000 per year for 26 years • What amount will be in his IRA?

  35. IRA(single person) • Clear registers 2nd CE/C CE/C • Enter PMT2,000 +/- PMT • Enter # Periods 26 N • Enter % Rate 5 %i • CPT FV 102,226.91

  36. IRA(married couple) • $2,000 each per year for 25 years • What amount will be in their IRAs?

  37. IRA--Married Couple • Clear registers 2nd CE/C CE/C • Enter PMT4,000 +/- PMT • Enter # Periods 25 N • Enter % Rate 11 %i • CPT FV457,653.23(hold)

  38. What if ????? • Interest rate is only 4% instead of 11%….just change the amount in % i

  39. IRA--Married 4% • Clear registers 2nd CE/C CE/C • Enter PMT4,000 +/- PMT • Enter # Periods 25 N • Enter % Rate 4 %i • CPT FV 166,583.63

  40. The difference • 11% = $457,653.23 • 4% = $166,583.63 $291,069.63

  41. Roth IRA • After-tax dollars • Accumulations can be withdrawn tax-free if: • age 59 1/2 • held for 5 years

  42. Roth IRA • $3,000 per year for 40 years • What amount will be in the Roth IRA?

  43. Roth IRA • Clear registers 2nd CE/C CE/C • Enter PMT3,000 +/- PMT • Enter # Periods 40 N • Enter % Rate 5 %i • CPT FV $362,399.32

  44. Roth IRA • $3,000 per year for 20 years. • What amount will be in the Roth IRA?

  45. Roth IRA • Clear registers 2nd CE/C CE/C • Enter PMT3,000 +/- PMT • Enter # Periods 20 N • Enter % Rate 6 %i • CPT FV $110,356.77

  46. Summary: Annual Regular Deposits

  47. New Problem: • How much will we have in the future if we add annually to our present savings?

  48. Beginning Balance: Add Annually

  49. Annual Deposits with Beginning Balance$10,000 • Clear registers 2nd CE/C CE/C • Enter PV (Beg. Bal.) 10,000 PV • Enter PMT 2,000 +/- PMT • Enter % Rate 5 %i • Enter # Periods 7 N • CPT FV 30,355.02 (hold)

  50. What if ????? • Interest rate is only 3% instead of 5% • Just change the interest rate % i

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