2. A = AMOUNT of money at the end of
the term
P = PRINCIPLE amount, the amount
originally invested or borrowed
r = RATE of interest as a decimal
number
n = NUMBER of times the principle is
compounded per year
t = TIME in years
Time Principle Rate Interest Balance
6. Using the TVM (Time Value Money) Solver ...
Total Number of payments to the account
(#years in account)(#times payments/year)
Annual Interest N = 48
rate as a percent I% = 5.25
PV = 6500
PMT = 0
FV = 8015.24
P/Y = 12
C/Y = 12
PMT: END BEGIN
7. Using the TVM (Time Value Money) Solver ...
Total Number of payments to the account
(#years in account)(#times payments/year)
Annual Interest N = 48
rate as a percent I% = 5.25 Present Value
PV = 6500 of the account
PMT = 0
FV = 8015.24
P/Y = 12
C/Y = 12
PMT: END BEGIN
8. Using the TVM (Time Value Money) Solver ...
Total Number of payments to the account
(#years in account)(#times payments/year)
Annual Interest N = 48
rate as a percent I% = 5.25
Present Value
PV = 6500
PayMenTs made of the account
PMT = 0
to the account FV = 8015.24 Future Value
P/Y = 12 of the account
C/Y = 12
PMT: END BEGIN
9. Using the TVM (Time Value Money) Solver ...
Total Number of payments to the account
(#years in account)(#times payments/year)
Annual Interest
rate as a percent N = 48
I% = 5.25 Present Value
PayMenTs made PV = 6500 of the account
to the account PMT = 0 Future Value
Number of Payments FV = 8015.24 of the account
made per Year P/Y = 12 Number of Compounding
C/Y = 12
periods per Year
PMT: END BEGIN
10. Using the TVM (Time Value Money) Solver ...
You invest $4500.00 at 5.75% interest compounded monthly.
How much money will you have at the end of three years?
Total Number of payments to the account
(#years in account)(#times payments/year)
Annual Interest
N = 48
rate as a percent
I% = 5.25 Present Value
PayMenTs made PV = 6500 of the account
to the account PMT = 0
Future Value
FV = 8015.24
Number of Payments of the account
P/Y = 12
made per Year C/Y = 12 Number of Compounding
PMT: END BEGIN periods per Year
PMT: Depends on when payments are made
each compounding period, we usually use END
[ALPHA] [SOLVE]
11. What's the difference?
N= N=
I%= I%=
PV= PV=
PMT= PMT=
FV= FV=
P/Y= P/Y=
C/Y= C/Y=
PMT: END BEGIN PMT: END BEGIN
17. Watching Money Grow ... HOMEWORK
N=
Calculate the final balance I%=
if $7500 were invested at PV=
8% per year, compounded PMT=
semiannually for 6 years. FV=
P/Y=
C/Y=
PMT: END BEGIN
How long will it take $12 000
N=
invested at 7.2% per year,
I%=
compounded quarterly, to
PV=
grow to $15 000?
PMT=
FV=
P/Y=
C/Y=
PMT: END BEGIN
18. Investing Regularly ... HOMEWORK
Calculate the final balance if $1500 were N=
invested at 8% per year, compounded semi I%=
annually, with additional investments of $1 000 PV=
at the end of every six months for five years. PMT=
FV=
P/Y=
C/Y=
PMT: END BEGIN
How long will it take to save $35 000, if $2 500 N=
were invested at 7.2% per year, compounded I%=
quarterly, followed by an additional $400 at the PV=
end of each 3month period? PMT=
FV=
P/Y=
C/Y=
PMT: END BEGIN
19. Attachments
Finance Cat by flickr user o205billege