Dec 9th, Book Report

T.V.M Solver

The T.V.M is used to find a missing variable in interest rate, time, and future value. It is also used for financial calculations. Everything under “TVM Solver” is a function that does a calculation based of the values entered in the TVM Solver.

How to get to the T.V.M Solver in your calculator:
1. Turn on calculator
2. Press “Apps”
3. Press “Finance”
4. Press “TVM Solver”
The variables in the TVM Solver are:

N = # of years.

I% = The % interest (or discount if you’re receiving money you) you are expecting.

PV = Initial Investment (this number should be negative if you are investing, as you’re giving your investing your money).

FV = Future value

PMT = Number of payments per period (period set below).

P/Y = Periods per year (should generally be one).

BEGIN = You should have your Ti-83 be on “END” by default, but you will want to change it to begin when dealing with annuity due.

END = You want to have this set when dealing with ordinary annuity.
Examples

Question 1:

We want to invest $1000 today and want it to be $5000 10 years from now. What is the interest rate we need to accomplish this?

Put into the calculator in the TVM Solver

N = 10

I% = 0 (because we don’t know what the interest rate is)

PV = -1000 (negative 1000 because that’s how much we’re investing)

PMT = 0 (no additional payments being paid / period )

FV = 5000 (this is how much we want to have by the end of 10 years)

P/Y = 1
After entering that all in go:
“2nd”
“Mode”
(It will take you back to the display screen.)
Next, press
“Apps”
Finance”
“TVM_I% (that’s number 3)

Your result should be 17.46%

That all means that if you invest $ 1000 today and want $5000 in 10 years from now, the interest rate you must have is 17.46%.
Question 2:

What must I invest now at 8% to get $5000 10 years from now?
Put into calculator in the TVM Solver

N = 10 (10 years)

I% = 8 (enter whole numbers, TVM Solver converts it to .08 for you)

PV = 0 (0 because we want to know how much to invest to get $5000)

PMT = 0 (no additional payments being paid / period )

FV = 5000 (this is how much we want to have by the end of 10 years)

P /Y= 1
After that go:
“2nd”
“Mode”
(Takes you back to your display screen)
Next press
“Apps”
“Finance”
“TVM_PV” (that’s number 4)

Your result should be -2315.96
That all means that if you invested (your investing which is why it’s a negative) $2315.96 today at 8%, in 10 years you will have $5000.

http://giddlebits.wordpress.com/2007/01/25/how-to-do-time-value-of-money-on-a-ti-83-plus/
Thank you Nathan Snell‘s Blog for the information and for the questions examples!