Chapter 13 financial calculator introduction Flashcards
The n key is used for inputting the
number of periods
The i key is used for inputting
the interest rate
PV stands for
present value
PMT is
payment
FV is
future value.
If I put $3,500 in the bank at the beginning of every year for 6 years, at 2.0% interest – how much will I have at the end? $20,348.65 $21,830.22 $22,519.99 $24,592.74
$22,519.99
6 n
2.0 i
3500 CHS PMT
fv
How much do I have to put aside each year, at 5% interest, to accumulate $9,000 to replace a boiler in 15 years? $388.24 $397.22 $555.89 $614.78
$397.22
15 n
5 i
9000 chs fv
pmt
If I put $29,000 in the bank at 1.75% interest for 9 years – how much will I have? $27,567.30 $28,073.45 $28,135.94 $33,900.63
$33,900.63
9 n
1.75 i
29000 chs pv
fv
You want to purchase a bond that matures at $50,000 in 15 years. If it is discounted at 4.65% interest, how much will you have to pay now?
15 n
4.65 i
50000 CHS FV
PV
25,286.08
What is the present value today of an $88,000 mortgage with 8% annual interest-only payments for 14 years?
88000 ENTER
.08 X 7040 (this is the annual interest payment you will receive - it is entered into the PMT key)
14 n
8 i
7040 CHS PMT
88000 CHS FV
PV
88,000
How much should an investor pay for a promissory note which is fully amortized with equal annual payments of $12,500 for 10 years, discounted at 12%? With this structure, there would be no balance left at the end of 10 years so the future value (FV) would be zero.
10 n
12 i
12500 CHS PMT
PV
70,627.79
What’s the value today of the right to receive a lump sum of $37,000 in 8 years, discounted at 7%?
8 n
7 i
37,000 chs fv
pv
You want to purchase a bond that matures at $100,000 in 10 years with no periodic interest payments. If it is discounted at 3.375% annual yield, how much will you have to invest now to buy the bond?
10 n
3.375 i
100,000 chs fv
pv
What is the present value today to an investor of a $186,000 mortgage bearing 5.2% interest and which provides for interest only payments annually with all principal due and payable at the end of 9 years, if the buyer of the mortgage requires a 12% yield.
$-118,608.30
186,000 x .052 = $9,672 annual interest payment.
9 n
12 i
9672 pmt
186000 fv
pv
186,000 x .052 = $9,672 annual interest payment.
20 n
6 i
123000 CHS PV
PMT
10,723.70
For example, with a 30 year mortgage paid monthly, we could calculate the number of payments by inputting
30 ENTER 12 X or you can just enter
30 g n
Assume a $82,000 mortgage with monthly payments for 25 years, at 8.35% interest. First let’s calculate the monthly payments.
25 g n
8.35 g i
82000 CHS PV
PMT
652.02
Assume a $118,500 mortgage, at 6.5% with a monthly payment of $883.50. For how many years was the original mortgage written?
6.5 g i
118500 CHS PV
883.50 PMT
n
240
The answer is 240 - but that is the number of months. To find the number of years, we enter:
12 ÷
20 years
Assume a 27 year mortgage with a monthly payment of $1,255.74 and a 9.2% interest rate. What was original amount of the mortgage?
27 g n
- 2 g i
- 74 CHS PMT
PV
150,000
We have a $212,750 mortgage, for 30 years and the monthly payment is $1,487.58. What is the interest rate?
30 g n
212750 CHS PV
1487.58 PMT
i
0.63
So, the answer is .63. But wait a minute – that is only the interest per month! We have to multiply by 12 to get the annual interest rate.
You can afford payments of $750 a month and you have a $25,000 down payment. The bank will give a mortgage for 30 years, at 6.8% with monthly payments. How expensive a house can you buy?
30 g n
6.8 g i
750 CHS PMT
PV
115,043.88
25000 +
140,043.88
With your $750, you would qualify for a mortgage of just over $115,000. Add in your down payment of $25,000 and you should be able to swing a house up to about $140,000.
You have a mortgage of $112,500 with a 25-year term and a 7.2% annual interest rate, with monthly payments. However, there will be a balloon payment due at the end of year 5. How much will that be (the amount of the remaining balance of the loan at that point)?
25 g n
7.2 g i
112500 CHS PV
PMT
809.54
Then we leave all the information in the rest of the registers but change the entry in the n register to 5 years and ask for the future value after 5 years.
5 g n
FV
102,818.06
If a 30 yr mortgage, with an interest rate of 6.2%, has monthly payments of $1,163.69; what was original mortgage amount?
$190,000
30 g n
- 2 g i
- 69 CHS PMT PV
190000
A $265,000 mortgage has monthly payments for 25 years, at 5.50% interest. How much are the monthly payments? $1,388.12 $1,438.55 $1,577.99 $1,627.33
$1,627.33
$1,627.33 CLR FIN 25 g n 5.5 g i 265000 CHS PV PMT
A $92,800 mortgage, with 6.4% interest, has a monthly payment of $631.39. How many years was the original term of the loan? 20 24 25 27
24
6.4 g i 92800 CHS PV 631.39 PMT n 12 ÷
If I put $9,000 in the bank at the beginning of each year for 10 years, at 4.5% interest – how much will I have at the end? $99,497.55 $102,356.78 $105,002.63 $115,570.61
$115,570.61
[g] [BEG] 10n, 4.5i, $9,000 CHS PMT, FV Answer is $115,570.61
How much do I have to put aside each year, at 6% interest, to accumulate $7,000 to replace a boiler in 10 years? $488.24 $501.01 $555.89 $614.78
$501.01
[g] [BEG] 10n, 6i, $7,000 CHS FV, PMT Answer is $501.01
If I put $24,000 in the bank at 2.75% interest for 7 years – how much will I have? $27,567.30 $28,073.45 $28,135.94 $29,019.11
$29,019.11
7n, 2.75i, $24,000 CHS PV, FV Answer is $29,019.11
We have a $124,500 mortgage, for 25 years and the monthly payment is $840.63. What is the interest rate?
- 4%
- 9%
- 5%
- 7%
6.5%
25Gn, $124,500 PV, $840.63 CHS PMT, i Answer is 0.542 12 X = 6.50%
A $72,800 mortgage, with 7.4% interest, has a monthly payment of $559.28. How many years was the original term of the loan? 20 22 25 29
22
7.4 Gi, 72,800 PV, 559.28 CHS PMT, n, 12 ÷ Answer is 22.
If I put $75,000 in the bank at 3.5% interest for 17 years – how much will I have? $115,204.68 $134,600.67 $136,357.89 $142,394.66
$134,600.67
17n, 3.5i, $75,000 CHS PV, FV Answer is $134,600.67
A mortgage is written in the amount of $195,000, for 20 years, and the monthly payment is $1,511.83. What is the annual interest rate?
- 5%
- 0%
- 2%
- 7%
7.0%
An apartment owner needs to build up $30,000 to replace the boilers in 10 years. He can expect 4.5% interest. How much is needed if he makes semi-annual payments? $ 1,145.89 $ 1,177.76 $ 1,251.04 $ 1,325.78
$ 1,177.76
Semi-annual payments for 10 years = 20 payments. You need to make the interest per period consistent with the number of periods in a year so with semi-annual payments, you need to convert the 4.5% annual interest rate into a 2.25% semi-annual interest rate. With your 12C enter: g BEG, 10 ENTER 2 X n, 4.5 ENTER 2 ÷ i, 30,000 FV, PMT Answer is $1,177.76
A 25 year mortgage, with an interest rate of 7.8%, has monthly payments of $1,327.58. What was original mortgage amount? $155,000 $164,500 $175,000 $183,000
$175,000
If I put $2,500 in the bank at the beginning of every year for 8 years, at 4.0% interest – how much will I have at the end? $22,348.65 $22,830.22 $23,956.99 $24,592.74
$23,956.99
An apartment owner needs to build up $30,000 to replace the boilers in 10 years. He can expect 4.5% interest. How much is needed if he makes semi-annual payments? $ 1,145.89 $ 1,177.76 $ 1,251.04 $ 1,325.78
$ 1,177.76
What’s the value today of the right to receive a lump sum of $27,000 in 7 years, discounted at 7%? $15,822.44 $16, 002.87 $16,814.24 $17.935.28
$16,814.24
A $136,500 mortgage has monthly payments for 25 years, at 6.75% interest. How much are the monthly payments? $899.24 $943.09 $956.78 $1,052.02
$943.09
What is the worth today of a $214,000 mortgage that will give me annual interest payments of 6.8% for 12 more years, discounted at 6.8%? $214,000.00 $99,215.78 $102,983.21 $109,374.56
$214,000.00
$214,000 X .068 = $14,552.00 annual interest payment. Enter 214000 CHS FV, 12n, 6.8i 14,552 CHS PMT PV Answer is $214,000.00.
If I invest $50,000 at 4.5% interest, how much will be available when I retire in 8 years? $55,248.90 $64,284.07 $71,105.03 $78,101.46
$71,105.03
8n, 4.5i, $50,000 CHS PV, FV Answer is $71,105,03
How much should I pay today for a contract that will give me a lump sum of $175,000 in 5 years, discounted at 6%? $118,026.47 $130,770.18 $133,093.21 $142,840.62
$130,770.18
5n, 6i, $175,000 CHS FV, PV Answer is $130,770.18
What is the worth today of a $450,000 mortgage that will give me annual interest payments of 7.2% for 18 more years, discounted at 7.2%? $207,903.59 $303,804.19 $222,451.21 $450,000.00
$450,000.00
$450,000 X .072 = $32,400 annual interest payment. Then enter: 450000 CHS FV, 18n, 7.2i, 32,400 CHS PMT, PV Answer is $450.000.00.
How much do I have to put aside each year, at 4% interest, to accumulate $12,000 to repave a parking lot in 7 years?
$1,460.88
[g] [BEG] 7n, 4i, $12,000 CHS FV, PMT
