The calculator’s 110-page manual covers all of its functions in detail, and it is H�\S�n�0��s4Rc��{X�����&���M���;c���3��|�ߒ�����P�&�ݖ�MB�m �-��� zg�4���F[H��(���y�U\�.z -�t���P��[�=���ߒM~��6���k�j���F73�\���ts��iV&��gC�cU���p{T�� =�A�22;�c�3HA0\���U�6��3�&Xp��H!����A$E�U���QC3ʙ�/ى��ZP�646h��2Jq'e�����{������G�n���I\'�9D�cZ�! BA II Plus™ Professional tutorials Punch the numbers and crunch the data. Now press CPT N and you will see that it will take 8.04 years for your money to double. Note that in our original problem we assumed that you would earn 8% per year, and found that you would need to invest about $25,000 to achieve your goal. One important thing to remember is that the present value will always (unless the interest rate is negative) be less than the future value. Enter the data as follows: 18 into N, 8 into I/Y, and 100,000 into FV. Solving for the interest rate is quite common. What follows are some cool short cuts you can take to calculate the mean and variance of a small data set. By default the BAII Plus Professional displays only two decimal places. Please continue on to part II of this tutorial to learn about using the BAII Plus Professional to solve problems involving annuities and perpetuities. If it isn't there, please drop me a note and I'll try to answer the question. This tutorial will demonstrate how to use the financial functions to handle time value of money problems and make financial math easy. Therefore, in order to reach the same goal, you would need to earn a higher interest rate. endstream endobj 98 0 obj <> endobj 99 0 obj <> endobj 100 0 obj <>stream }.s�Ol��9����]\L�ʳ�'00H�z'7���m^)W O��5u\�('�7H�|�a��5����l�h`r�:��FG3��r;��Xa�� ӆ�@����"^@�3�0�2y2�00Y1>f|���e=O����/'��,#�H8X30]=�������N��9 ,KKJ *Note: If you don't make either the PV or FV a negative number (and the other one positive), then you will get Error 5 on the screen instead of the answer. Press 2nd FV (CLR TVM) to clear the memory. ن�U^�ή�� © 1995 - 2020 by Timothy R. Mayes, Ph.D. Remember, the calculator only knows what you tell it, it doesn't know what you really meant. "g̢[�~; u��:$4�u[�x���T~���d�0�9�F��l�:�H�F�-�� l�� ��\�(̰��'�L(�~�U�b�`�\{�@BK����;���G�}+��u��6��a��. This video covers how to calculate the following: Of course, most people don't recognize a wrong answer when they get one, so they blithely forge ahead. Now press CPT PV and you will see that you need to invest $25,024.90 today in order to meet your goal. Now press Enter and then 2nd CPT (Quit) to return to a blank screen. 0 ��R� That is because, if both numbers are positive, the calculator thinks that you are getting a benefit without making any investment. This requires that you understand the calculations that the calculator is doing and the relationships between the variables. I would press 2nd . Assume that you can earn 9% per year on your investment. %PDF-1.5 %���� Click here to learn more. When we entered the interest rate, we input 10 rather than 0.10. Sometimes you know how much money you have now, and how much you need to have at an undetermined future time period. Furthermore, assume that you have determined that you will need $100,000 at that time in order to pay for tuition, room and board, party supplies, etc. Calculate the modified duration on the bond. That's exactly what I have been wanting for years. That is a lot of money to invest all at once, but we'll see on the next page that you can lessen the pain by investing smaller amounts each year. For example, suppose that we wanted to find out the future value if we left the money invested for 10 years instead of 5. That's it, the calculator is ready to go. � z�(#�CCD�#�1B���\�bRJty�y��:�)}S&A��.�~�n�*���&�&������ƇA���mm��6�]8*�Y�� ] �X�T�nw���~\�9�$���������Q���������Zm2�����]X�+g*��)��[�,��M�R��a4��4^����8�~�2���D��`6,a��x��*I�|'+U��=�8�l|�Ja��E�~�����U��fK���85CO6%�Uq��z�"U��R���{>=W�\$�*/���Q�A���� The order in which the numbers are entered does not matter. You may have to use the arrow keys to scroll through the list of options until you see DEC = 2 (or whatever the current number is). Type 18 into N, and then press CPT I/Y to find that you need to earn an average of 9.35% per year. If you believe that you can earn an average annual rate of return of 8% per year, how much money would you need to invest today as a lump sum to achieve your goal? As before, we need to be careful when entering the PV and FV into the calculator. This is not enough. Unlike other financial calculators, the BAII Plus Professional comes from the factory set to assume annual compounding (others default to monthly compounding which is less than optimal). If you know the interest rate, then we can solve for the amount of time that it will take for the present value to grow to the future value by solving for N. Suppose that you have $1,250 today and you would like to know how long it will take you double your money to $2,500. endstream endobj 102 0 obj <>stream Simply enter 10 into. Before we jump straight in, a quick overview: These tips and advice apply to both BA II Plus & BA II Plus Professional calculator models. 0 In this step-by-step tutorial, we walk you through how to obtain the Modified Duration value using a Texas Instrument BA II Plus financial calculator. Once you set the number of decimal places, press Enter to lock in your choice. In this case, we already know the future value ($100,000), the number of periods (18 years), and the per period interest rate (8% per year). Or, perhaps you are thinking of making an investment and you would like to know what rate of return you need to earn to reach a certain future value. If you don't find the answer that you are looking for, please check the FAQ. endstream endobj startxref Note that we enter the $100,000 as a positive number because you will be withdrawing that amount in 18 years (it will be a cash inflow). Why? That's exactly what I have been wanting for years. 123 0 obj <>stream 5 Enter 2nd CPT (Quit) to display 5 decimal places. BA II Plus Tutorial 1 Payments per year: The calculator is initially set at twelve payments per year (it assumes monthly compounding). When you have solved a problem, always be sure to give the answer a second look and be sure that it seems likely to be correct. In addition to the previously mentioned financial keys, the BAII Plus Professional also has the CF (cash flow) key to handle a series of uneven cash flows. Well, the compounding assumption is hidden from view and in my experience people tend to forget to set it to the correct assumption. If you ever wish to change the compounding assumption (which I don't recommend), press 2nd I/Y and enter the number of periods per year (12 for monthly, 2 for semiannual, etc). In this case, we have a 4-variable problem and were given 3 of them (N, I/Y, and PV) and had to solve for the 4th (FV). To change this, press the 2nd key, then press I/Y. Understanding the previous sections of this document is critical to your success on the exam. Let's try a new problem: Suppose that you are planning to send your daughter to college in 18 years. The answer you get should be 161.05. Well, the compounding assumption is hidden from view and in my experience people tend to forget to set it to the correct assumption. I will keep the examples rather elementary, but understanding the basics is all that is necessary to learn the calculator. This is the classic type of problem that we can quickly approximate using the Rule of 72. Let's return to our college savings problem from above, but we'll change it slightly. However, we can easily find the exact answer using the BAII Plus calculator. 111 0 obj <>/Filter/FlateDecode/ID[<05777E79B7AEEFCA358C33A58AD95672><7647E19EC5A29D46ADB852AD68A1AB55>]/Index[97 27]/Info 96 0 R/Length 75/Prev 140355/Root 98 0 R/Size 124/Type/XRef/W[1 2 1]>>stream If you have $20,000 to invest today, what compound average annual rate of return do you need to earn in order to reach your goal?

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