1. Personal Finance or managing your money

2. A = AMOUNT of money at the end of
the term
P = PRINCIPLE amount, the amount
originally invested or borrowed
r = RATE of interest as a decimal
number
n = NUMBER of times the principle is
compounded per year
t = TIME in years
Time Principle Rate Interest Balance

4. You invest $6500.00 at 5.25% interest compounded monthly. How
much money will you have at the end of 4 years? $8015.24
A = AMOUNT of money at the end of
the term
P = PRINCIPLE amount, the amount
originally invested or borrowed
r = RATE of interest as a decimal
number
n = NUMBER of times the principle is
compounded per year
t = TIME in years

5. Using the TVM (Time Value Money) Solver ...
You invest $6500.00 at
5.25% interest Total Number of payments to the account
compounded monthly. (#years in account)(#times payments/year)
How much money will
you have at the end of
four years?
N = 48
I% = 5.25
PV = ­6500
PMT = 0
FV = 8015.24
P/Y = 12
C/Y = 12
PMT: END BEGIN

6. Using the TVM (Time Value Money) Solver ...
Total Number of payments to the account
(#years in account)(#times payments/year)
Annual Interest N = 48
rate as a percent I% = 5.25
PV = ­6500
PMT = 0
FV = 8015.24
P/Y = 12
C/Y = 12
PMT: END BEGIN

7. Using the TVM (Time Value Money) Solver ...
Total Number of payments to the account
(#years in account)(#times payments/year)
Annual Interest N = 48
rate as a percent I% = 5.25 Present Value
PV = ­6500 of the account
PMT = 0
FV = 8015.24
P/Y = 12
C/Y = 12
PMT: END BEGIN

8. Using the TVM (Time Value Money) Solver ...
Total Number of payments to the account
(#years in account)(#times payments/year)
Annual Interest N = 48
rate as a percent I% = 5.25
Present Value
PV = ­6500
PayMenTs made of the account
PMT = 0
to the account FV = 8015.24 Future Value
P/Y = 12 of the account
C/Y = 12
PMT: END BEGIN

9. Using the TVM (Time Value Money) Solver ...
Total Number of payments to the account
(#years in account)(#times payments/year)
Annual Interest
rate as a percent N = 48
I% = 5.25 Present Value
PayMenTs made PV = ­6500 of the account
to the account PMT = 0 Future Value
Number of Payments FV = 8015.24 of the account
made per Year P/Y = 12 Number of Compounding
C/Y = 12
periods per Year
PMT: END BEGIN

10. Using the TVM (Time Value Money) Solver ...
You invest $4500.00 at 5.75% interest compounded monthly.
How much money will you have at the end of three years?
Total Number of payments to the account
(#years in account)(#times payments/year)
Annual Interest
N = 48
rate as a percent
I% = 5.25 Present Value
PayMenTs made PV = ­6500 of the account
to the account PMT = 0
Future Value
FV = 8015.24
Number of Payments of the account
P/Y = 12
made per Year C/Y = 12 Number of Compounding
PMT: END BEGIN periods per Year
PMT: Depends on when payments are made
each compounding period, we usually use END
[ALPHA] [SOLVE]

11. What's the difference?
N= N=
I%= I%=
PV= PV=
PMT= PMT=
FV= FV=
P/Y= P/Y=
C/Y= C/Y=
PMT: END BEGIN PMT: END BEGIN

12. Solve for N (the number of payments) ...
To buy a new car you must take out a loan of $10 593.30. You can
afford a payment of $238 per month. The dealership offers you an
annual interest rate of 3.75% compounded monthly.
How many payments must you make?
How much interest have you paid?
N=
I%=
PV=
PMT=
FV=
P/Y=
C/Y=
PMT: END BEGIN

14. Solve for I (the rate of interest) ...
A certain university program will cost $20 000. What annual
interest rate, compounded monthly, must you obtain if you can
save $288.50 per month for the next five years and hope to have
all the money saved by that time?
N=
I%=
PV=
PMT=
FV=
P/Y=
C/Y=
PMT: END BEGIN

15. Solve for PV (the value now) ...
You plan to buy a car. You can make monthly payments of $525
and the interest rate advertised for car loans is 6.25%,
compounded monthly. If the dealership is offering you financing for
two years how much car can you afford?
N=
I%=
PV=
PMT=
FV=
P/Y=
C/Y=
PMT: END BEGIN

16. Solve for FV (the future value) ...
You decide to invest $6500. The bank offers an interest rate of
8.25% compounded annually. What will your money be worth in 7
years if the interest rate remains unchanged?
HOMEWORK
N=
I%=
PV=
PMT=
FV=
P/Y=
C/Y=
PMT: END BEGIN

17. Watching Money Grow ... HOMEWORK
N=
Calculate the final balance I%=
if $7500 were invested at PV=
8% per year, compounded PMT=
semi­annually for 6 years. FV=
P/Y=
C/Y=
PMT: END BEGIN
How long will it take $12 000
N=
invested at 7.2% per year,
I%=
compounded quarterly, to
PV=
grow to $15 000?
PMT=
FV=
P/Y=
C/Y=
PMT: END BEGIN

18. Investing Regularly ... HOMEWORK
Calculate the final balance if $1500 were N=
invested at 8% per year, compounded semi­ I%=
annually, with additional investments of $1 000 PV=
at the end of every six months for five years. PMT=
FV=
P/Y=
C/Y=
PMT: END BEGIN
How long will it take to save $35 000, if $2 500 N=
were invested at 7.2% per year, compounded I%=
quarterly, followed by an additional $400 at the PV=
end of each 3­month period? PMT=
FV=
P/Y=
C/Y=
PMT: END BEGIN

19. Attachments
Finance Cat by flickr user o205billege