MODULE 3 - TIME VALUE OF MONEY
QUESTIONS WITH 100%CORRECT
ANSWERS { GRADED A+}
[N] - ✔✔Number of periods
the time intervals between when interest is added to the account.
Interest can be compounded annually, semi-annually, quarterly, monthly, daily,
continuously, or on any other basis.
[I/YR] - ✔✔Interest per Year
[PMT] - ✔✔Payment
How to turn off the calculator? - ✔✔DOWNSHIFT -- ON/OFF
,How to clear the calculator? - ✔✔DOWNSHIFT -- C/C ALL
Setting the display to two decimal places? - ✔✔DOWNSHIFT -- "=" -- then enter
the number of decimal places you want displayed to the right of the decimal.
Setting the display with either a decimal point or a comma? - ✔✔DOWNSHIFT -
- decimal key "."
this will allow you to toggle back and forth between a comma and a decimal
Setting the calculator to "begin" or end" mode. - ✔✔DOWNSHIFT -- BEG/END
key.
when you see BEG on the bottom display, you're in beginning mode. You're in
END mode then nothing is displayed.
What does annuity due mean? - ✔✔Payments are being made at the beginning of
a period
,Retirement income calculations are annuity due calculations because it is assumed
the retirees need income at the beginning of each year to pay their annual expenses.
Annuity due is also used for education expenses, because these expenses are paid
at the beginning of the school year, not after classes have been completed.
What does ordinary annuity mean? - ✔✔Payments at the end of each period
Most payments such as house or car payments, are ordinary annuities.
How to set the number of compounding periods?
or number of payments per year? - ✔✔For example, if interest is paid quarterly,
you should set the calculator to four payments per year. This would be done by:
1. striking the 4 key
2. striking the downshift key
3. striking the P/YR key
, To check that this has been done correctly, strike the downshift key and hold down
the "C ALL" key below it. You should see "4 P_Yr" on the display. This confirms
that future calculations are set for four payments per year.
Steps for Preparing the calculator for every problem: - ✔✔here are three steps to
keep in mind prior to working each and every problem:
1. Make sure the calculator is in the correct mode—most problems will be in the
end mode.
2. Set up the calculator for the correct number of payments per year.
3. Clear all—and when you do this it will also let you check the number of
payments per year that you have entered.
For TVM calculations, you will be using the top row of keys for future value (FV),
present value (PV), rate of return (I/YR), periodic payment (PMT), and number of
compounding periods (N) calculations. Typically, you are given three of the
variables and are solving for a fourth. If periodic payments are involved, you may
be given four variables and are solving for a fifth.
QUESTIONS WITH 100%CORRECT
ANSWERS { GRADED A+}
[N] - ✔✔Number of periods
the time intervals between when interest is added to the account.
Interest can be compounded annually, semi-annually, quarterly, monthly, daily,
continuously, or on any other basis.
[I/YR] - ✔✔Interest per Year
[PMT] - ✔✔Payment
How to turn off the calculator? - ✔✔DOWNSHIFT -- ON/OFF
,How to clear the calculator? - ✔✔DOWNSHIFT -- C/C ALL
Setting the display to two decimal places? - ✔✔DOWNSHIFT -- "=" -- then enter
the number of decimal places you want displayed to the right of the decimal.
Setting the display with either a decimal point or a comma? - ✔✔DOWNSHIFT -
- decimal key "."
this will allow you to toggle back and forth between a comma and a decimal
Setting the calculator to "begin" or end" mode. - ✔✔DOWNSHIFT -- BEG/END
key.
when you see BEG on the bottom display, you're in beginning mode. You're in
END mode then nothing is displayed.
What does annuity due mean? - ✔✔Payments are being made at the beginning of
a period
,Retirement income calculations are annuity due calculations because it is assumed
the retirees need income at the beginning of each year to pay their annual expenses.
Annuity due is also used for education expenses, because these expenses are paid
at the beginning of the school year, not after classes have been completed.
What does ordinary annuity mean? - ✔✔Payments at the end of each period
Most payments such as house or car payments, are ordinary annuities.
How to set the number of compounding periods?
or number of payments per year? - ✔✔For example, if interest is paid quarterly,
you should set the calculator to four payments per year. This would be done by:
1. striking the 4 key
2. striking the downshift key
3. striking the P/YR key
, To check that this has been done correctly, strike the downshift key and hold down
the "C ALL" key below it. You should see "4 P_Yr" on the display. This confirms
that future calculations are set for four payments per year.
Steps for Preparing the calculator for every problem: - ✔✔here are three steps to
keep in mind prior to working each and every problem:
1. Make sure the calculator is in the correct mode—most problems will be in the
end mode.
2. Set up the calculator for the correct number of payments per year.
3. Clear all—and when you do this it will also let you check the number of
payments per year that you have entered.
For TVM calculations, you will be using the top row of keys for future value (FV),
present value (PV), rate of return (I/YR), periodic payment (PMT), and number of
compounding periods (N) calculations. Typically, you are given three of the
variables and are solving for a fourth. If periodic payments are involved, you may
be given four variables and are solving for a fifth.
