March 25, 2009

Today in Mr. Bennets class we learned how to use thie TVM solver on our calculators. The TVM solver is pretty handy and could very well be used in everyday situations. TVM stands for Time, Value of Money.

To access the TVM solver press 2nd function finance.
Then press enter on the TVM solver.
Then you should see... N ( Total number of payments)
I% ( Annual interest rate as a percent)
PV ( Present value)
PMT ( Payment each period)
FV ( Future value, or accumulated amount)
P/Y ( Number of payments per year)
C/Y ( Number of compounding periods per year)


A positive value indicates the amount is earned, and a negative value indicates the amount invested.

An example of what we did in class:

Solve for FV ( future Value)

You decide to invest $6500. the bank offers a interest rate of 8.25% compounded annually. What will your money be worth in 7 years if the interest rate remains the same?

Step 1- find the TVM solver, then fill it in
N=7
I%=8.25
PV=-6500
PMV=0
FV=0
P/Y=1
C/Y=1

Then to figure out what the future value will be you put your cursor beside FV and press ALPHA then ENTER

The right answer should be
FV=11321.62307
This means your investment will be worth $11321.62 in a total of 7 years time.


We also learned the RULE OF 72
This rule figures out how long it will take to double your money.
The formula is:
T = 72 / Annual interest rate

After we were done listening to Mr. Bennet we were assigned Page 158 in our text books.
We were to do questions #2 and #6 using the TVM solver.