HP 15c - Manual (Page 25)

Section 1: Using _ Effectively 25
n The number of compounding periods. (For example, a 30 year loan with monthly
payments has n = 12 x 30 = 360.)
i The interest rate per compounding period expressed as a percent. (To calculate i,
divide the annual percentage rate by the number of compounding periods in a year.
That is, 12% annual interest compounded monthly equals 1% periodic interest.)
PV The present value of a series of future cash flows or the initial cash flow.
PMT The periodic payment amount.
FV The future value. That is, the final cash flow (balloon payment or remaining balance)
or the compounded value of a series of prior cash flows.
Possible Problems Involving Annuities
and Compound Amounts
Allowable
Combinations of
Variables
Typical Applications
Initial Procedure
For Payments at
End of Period
For Payments at
Beginning of Period
n, i, PV, PMT (Enter
any three and
calculate the fourth.) Direct reduction loan.
Discounted note.
Mortgage.
Lease.
Annuity due.
Use ´CLEARQ
or set FV to zero.
n, i, PV, PMT, FV
(Enter any four and
calculate the fifth.) Direct reduction loan
with balloon
payment.
Discounted note.
Least with residual value.
Annuity due.
None.
n, i, PMT, FV (Enter
any three and
calculate the fourth.) Sinking fund. Periodic savings.
Insurance.
Use ´CLEARQ
or set PV to zero.
n, i, PV, FV (Enter any
three and calculate the
fourth.) Compound growth.
Savings.
Use ´CLEARQ
or set PMT to zero.
The program accommodates payments that are made at the beginning or end of compounding
periods. Payments made at the end of compounding periods (ordinary annuity) are common
in direct reduction loans and mortgages. Payments made at the beginning of compounding
periods (annuity due) are common in leasing. For payments at the end of periods, clear flag
0. For payments at the beginning of periods, set flag 0. If the problem involves no payments,
the status of flag 0 has no effect.
This program uses the convention that money paid out is entered and displayed as a negative
number, and that money received is entered and displayed as a positive number.
A financial problem can usually be represented by a cash flow diagram. This is a pictorial
representation of the timing and direction of financial transactions. The cash flow diagram
has a horizontal time line that is divided into equal increments that correspond to the