Sharp El738 User Guide
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20 The ENT and COMP symbols Listed fi nancial variables are categorized by whether they are known or unknown. When the variable is selected (displayed), the “ENT” and/or “COMP” symbols will appear to indicate that the current variable may be entered (known variable) and/or calculated (unknown variable), respectively. For details, refer to the explanations or examples for each fi nancial function. Note: TVM variables (N, I/Y, PV, PMT and FV) can be entered (known variables) and calculated (unknown variables), however, neither “ENT” nor “COMP” will appear on the display. Category Display symbols Descriptions For entry onlyENTVariable can be used as a known, but not as an unknown. For calculation onlyCOMPVariable can be used as an unknown, but not as a known. For entry or calcula- tionENT COMPVariable can be used as either a known or an unknown. Calculated automati- cally—Unknown variable, but the calculator calculates the value automatically. Notes: • During fi nancial calculation, the word “calculating!” will be displayed on the screen. You can press s at this time to cancel the calculation. • Calculation-only and automatically calculated variables have no default values. • The symbol will be displayed if the value of the displayed variable has not been calculated yet (for variables that can be calculated). JOBODJBMVODUJPOT$VSSFOUJOEEJOBODJBMVODUJPOT$VSSFOUJOEE1.1.
21 Compound interest This calculator assumes interest is compounded periodically in fi nancial calculations (compound interest). Compound inter- est accumulates at a predefi ned rate on a periodic basis. For example, money deposited in a passbook saving account at a bank accumulates a certain amount of interest each month, increasing the account balance. The amount of interest received each month depends on the balance of the account during that month, including interest added in previous months. Interest earns interest, which is why it is called compound interest. It is important to know the compounding period of a loan or investment before starting, because the whole calculation is based on it. The compounding period is specifi ed or assumed (usually monthly). Cash fl ow diagrams The direction of arrows indicates the direction of cash movement (infl ow and outfl ow) with time. This manual uses the following cash fl ow diagrams to describe cash infl ows and outfl ows. Payment (PMT)...... Inflow (+) Cash flowPresent value (PV) Future value (FV) Time Outflow (–) JOBODJBMVODUJPOT$VSSFOUJOEEJOBODJBMVODUJPOT$VSSFOUJOEE1.1.
22 TVM (Time Value of Money) Solver Analyze equal and regular cash fl ows. These include calcula- tions for mortgages, loans, leases, savings, annuities, and contracts or investments with regular payments. Note: Discounted cash fl ow analysis can be done using un- equal cash fl ows (see page 37). An amortization schedule can be calculated using the information stored in the TVM solver (see page 33). Variables used in the TVM solver VariableCorresponding variable keyDescriptionDefault value N NTotal number of payments 1 I/Y fInterest rate per year 0 PV vPresent value 0 PMT uPayment 0 FV TFuture value 0 P/Y . wNumber of payments per year 1 C/Y . w iNumber of compounding periods per year1 Setting the payment period (payment due) You can toggle between ordinary annuity (payment at the end of the period) and annuity due (payment at the beginning of the period) using . ". The default setting is ordinary annuity (BGN is not displayed). Refer to page 28 for details. Basic operations Refer to page 19 for basic variable operations. 1. Press s to clear the display. • Make sure the calculator is in NORMAL mode. • All the TVM solver variables retain their previously entered values. If you wish to clear all the data, press . b. 2. Select ordinary annuity or annuity due using . ". JOBODJBMVODUJPOT$VSSFOUJOEEJOBODJBMVODUJPOT$VSSFOUJOEE1.1.
23 3. Enter values into TVM solver variables. • Enter a value and press the appropriate TVM variable key ( N, f, v, u, T). • Press . w and then enter a value for P/Y. The same value is automatically assigned to C/Y as well. Val- ues entered into P/Y or C/Y must be positive. After enter- ing values, press s to quit the P/Y and C/Y settings. • After setting P/Y (number of payments per year), you can use . < to enter N (total number of payments). Enter the number of years and press .
24 Procedure Key operation Display Set all the variables to default values.. b 000 Make sure ordinary annuity is set (BGN is not displayed). Set the number of pay- ments per year to 12.. w 12 QP/Y= 1200 The number of compounding periods per year is automatically set to the same value as P/Y. Confi rm the number of compounding periods per year.i C/Y= 1200 Quit the P/Y and C/Y settings.s 000 Calculate the total num- ber of payments and store in N.20 . < NANS~N 24000 Enter the present value.56000 v56———~PV 5600000 Enter payment. , 440 u(-44—)~PMT -44000 Enter the future value.0 T—~FV 000 Calculate the annual interest rate.@ fI/Y= 717 Answer: The annual interest rate is 7.17%. Note: If you make a mistake, press L to erase the number and enter the correct number to continue. After pressing the TVM variable key, you must re-enter values from the beginning. JOBODJBMVODUJPOT$VSSFOUJOEEJOBODJBMVODUJPOT$VSSFOUJOEE1.1.
25
Calculating basic loan payments
Calculate the quarterly payment for a $56,000 mortgage loan
at 6.5% compounded quarterly during its 20-year amortization
period.
I/Y = 6.5%
N = 4 × 20 years = 80...... PV = $56,000
FV = 0
PMT = ?
Procedure Key operation Display
Set all the variables to
default values..
b
000
Make sure ordinary annuity is set (BGN is not displayed).
Set the number of pay-
ments per year to 4..
w
4
QP/Y=
400
Confi rm the number of
compounding periods per
year.iC/Y=
400
Quit the P/Y and C/Y set-
tings.s
000
Calculate the total
number of payments and
store in N.20
.
<
NANS~N
8000
Enter the present value.56000
v56———~PV
5600000
Enter the future value.0
T—~FV
000
Enter the annual interest
rate.6.5
f6.5~I/Y
650
Calculate the quarterly
payment.@
uPMT=
-125586
Answer: The quarterly payments are $1,255.86.
2
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26
Calculating future value
You will pay $200 at the end of each month for the next three
years into a savings plan that earns 6.5% compounded quar-
terly. What amount will you have at the end of period if you
continue with the plan?
N = 12 × 3 years = 36...... PV = 0
PMT = –$200 I/Y = 6.5% (quarterly)FV = ?
PMT = –$200
Procedure Key operation Display
Set all the variables to
default values..
b
000
Make sure ordinary annuity is set (BGN is not displayed).
Set the number of pay-
ments per year to 12..
w
12
QP/Y=
1200
Set the number of com-
pounding periods per
year to 4.i 4
QC/Y=
400
Quit the P/Y and C/Y
settings.s
000
Calculate the total num-
ber of payments and
store in N.3
.
<
NANS~N
3600
Enter the present value.0
v—~PV
000
Enter payment.
, 200
u(-2——)~PMT
-20000
Enter the annual inter-
est rate.6.5
f6.5~I/Y
650
Calculate the future
value.@
TFV=
792219
Answer: You will have $7,922.19 at the end of the three-year
period.
3
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27
Calculating present value
You open an account that earns 5% compounded annually. If
you wish to have $10,000 twenty years from now, what amount
of money should you deposit now?
FV = $10,000
N = 20 years
PV = ? I/Y = 5%
Procedure Key operation Display
Set all the variables to
default values. .
b
000
Make sure ordinary annuity is set ( BGN is not displayed).
Set the number of pay-
ments per year to 1. .
w
1
QP/Y=
100
The number of compounding periods per year is automatically set to 1.
Press s to exit the P/Y and C/Y settings.
Enter the total number
of payments. s
20
N2—~N
2000
Enter the future value.10000 T1————~FV
1000000
Set payment to zero.0 u—~PMT
000
Enter the annual inter-
est rate.5 f5~I/Y
500
Calculate the present
value. @
vPV=
- 376889
Answer: You should deposit $3,768.89 now.
4
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28
Specifying payments due (.
")
This calculator can select ordinary annuity or annuity due de-
pending on the regular cash fl ow (payment) conditions.
Ordinary annuity (END):
This is the default setting for fi nancial calculations. BGN is not
displayed. A regular cash fl ow (payment) is received at end of
each payment period. Often applied to loan calculations, etc.
Annuity due (BGN):
BGN appears on the display. A regular cash fl ow (payment) is
received at the beginning of each payment period. Often applied
to the fi nance lease of an asset.
To toggle between ordinary annuity and annuity due, press
.
" .
Note: The above selection only affects the TVM solver.
Ordinary annuity
Your company wishes to accumulate a fund of $300,000 over the
next 18 months in order to open a second location. At the end of
each month, a fi xed amount will be invested in a money market
savings account with an investment dealer. What should the
monthly investment be in order to reach the savings objective, as-
suming the account will earn 3.6% interest compounded monthly?
N = 18
PV = 0
FV = $300,000
PMT = ?
......
I/Y = 3.6%
Procedure Key operation Display
Set all the variables to
default values. .
b
000
Make sure ordinary annuity is set ( BGN is not displayed).
Set the number of pay-
ments per year to 12. .
w
12
Q
P/Y=
1200
The number of compounding periods per year is automatically set to
12. Press s to exit the P/Y and C/Y settings.
1
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29 Procedure Key operation Display Enter the total number of payments.s 18 N 18~N 1800 Enter the future value.300000 T3—————~FV 30000000 Set the present value to zero.0 v—~PV 000 Enter the annual inter- est rate.3.6 f3.6~I/Y 360 Calculate payment. @ uPMT= -1624570 Answer: The monthly investment should be $16,245.70. Annuity due Your company wishes to obtain a computer system with a value of $2,995. The same system may be leased for 24 months at $145 per month, paid at the beginning of each month. At the end of the lease, the system may be purchased for 10% of the retail price. Should you lease or purchase the computer if you can obtain a two-year loan at 7.2%, compounded monthly, to purchase the computer? N = 24...... PV = $2,995 I/Y = ?% FV = $2,995 × 10% = $299.5 PMT = –$145 Procedure Key operation Display Set all the variables to default values.. b 000 Set to annuity due (BGN is displayed).. " 000 Set the number of pay- ments per year to 12.. w 12 QP/Y= 1200 2 JOBODJBMVODUJPOT$VSSFOUJOEEJOBODJBMVODUJPOT$VSSFOUJOEE1.1.