Financial Calculations Worksheet Page 8
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3019 - 3
Compound Interest Calculations
PMT
............... payment for each installment (payment in case of loan;
deposit in case of savings)
FV
.................. future value (unpaid balance in case of loan; principal plus
interest in case of savings)
P
Y
/
.................. installment periods per year
C
Y
/
................. compounding periods per year
Inputting Values
n
PV
A period (
) is expressed as a positive value. Either the present value (
) or
FV
PV
FV
future value (
) is positive, while the other (
or
) is negative.
Precision
This calculator performs interest calculations using Newton’s Method, which
produces approximate values whose precision can be affected by various
calculation conditions. Because of this, interest calculation results produced by
this calculator should be used keeping the above limitation in mind or the
results should be verified.
k k k k k Compound Interest Examples
This section shows how compound interest calculations can be used in a variety
of applications.
u u u u u Savings (standard compound interest)
Input Condition: Future value is greater than present value.
PMT
Formula Representation of Input Condition:
= 0
PV
FV
|
| < |
|
Example
Calculate the interest rate required to increase a principal of
$10,000 to $12,000 in three years, when compounding is
performed semiannually.
Perform the following key operations from the input screen.
dw(Input
n
= 3.)
c
-baaaaw(
PV
= –10,000)
aw
bcaaaw(
FV
= 12,000)
bw
cw(Semiannual compounding)
2(
I
%)
328
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