![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]](https://image.slidesharecdn.com/lesson1apr52010-100405122627-phpapp02/85/Lesson-1-Apr-5-2010-10-320.jpg)
Lesson 1 Apr 5 2010
- 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