Using the Hewlett Packard 10BII calculator

1

• Using the Hewlett Packard 10BII calculator
• This presentation will show you how to use the hp
  10BII calculator and will introduce you to basic
  time value of money problems.

2

• Important keys for time value problems

3

• Important keys for time value problems.
• N number of compounding periods.

4

• Important keys for time value problems.
• N number of compounding periods.
• N can mean years, months, weeks, days, etc. as
  you will soon see.

5

• Important keys for time value problems.
• I/YR Interest rate per year.

6

• Important keys for time value problems.
• PV Present Value.

7

• Important keys for time value problems.
• PMT Payment.

8

• Important keys for time value problems.
• FV Future value.

9

• Turn it on
• Push the ON key at the bottom left.

10

• Turn it on
• Push the ON key at the bottom left.

11

• Check compounding
• Push the shift key once.

12

• Check compounding
• Push the shift key once.

13

• Check compounding
• Push the shift key once.
• Hold down the clear key C.

14

• Check compounding
• Push the shift key once.
• Hold down the clear key C.

15

• Check compounding
• Push the shift key once.
• Hold down the clear key C.
• The default is 12 periods per year (monthly
  compounding).

16

• Check compounding
• Push the shift key once.
• Hold down the clear key C.
• The default is 12 periods per year (monthly
  compounding).

12 P_Yr
17

• Change compounding
• Lets change to annual compounding (1
  period per year).

12 P_Yr
18

• Change compounding
• Type 1.

1
19

• Change compounding
• Type 1.
• Push the shift key.

1
20

• Change compounding
• Type 1.
• Push the shift key.
• Push PMT.

1
21

• Change compounding
• Type 1.
• Push the shift key.
• Push PMT.
• This changes P/YR, periods per year, which is
  printed in yellow on the PMT key.

1.0000
22

• Change compounding
• Now, shift and clear to be sure it worked.

23

• Change compounding
• Now, shift and clear to be sure it worked.
• You should have 1 period per year on your
  screen.
• You are set for annual compounding.

1 P_Yr
24

• Note about compounding
• If P/YR 1, N will be years.
• If P/YR 2, N will be half years.
• If P/Y 4, N will be quarter years.
• If P/YR 12, N will be months.
• If P/YR 365, N will be days.

1 P_Yr
25

• Following are step-by-step solutions to the TVM
  problem set .
• The following slides will assist you with these
  problems.

3403
26
The Time Value of Money
27

• Future Value

28
Future Value - single sumsIf you deposit 100
in an account earning 6, how much would you have
in the account after 1 year?
29
Future Value - single sumsIf you deposit 100
in an account earning 6, how much would you have
in the account after 1 year?
PV FV
0 1
30
Future Value - single sumsIf you deposit 100
in an account earning 6, how much would you have
in the account after 1 year?
PV -100 FV
0 1

• Calculator Solution
• P/Y 1 I 6
• N 1 PV -100
• FV 106

31
Future Value - single sumsIf you deposit 100
in an account earning 6, how much would you have
in the account after 1 year?
PV -100 FV 106
0 1

• Calculator Solution
• P/Y 1 I 6
• N 1 PV -100
• FV 106

32

• How to do this
• Shift and clear.

33

• How to do this
• Shift and clear.

34

• How to do this
• Shift and clear.
• Compounding should be set for 1 period per year.

1 P_Yr
35

• How to do this
• Enter the other numbers in any order.

36

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.

-100
37

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.

-100
38

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 6 and push I/YR.

6
39

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 6 and push I/YR.
• Type 1 and push N.

1
40

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 6 and push I/YR.
• Type 1 and push N.
• Push FV to solve.

41

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 6 and push I/YR.
• Type 1 and push N.
• Push FV to solve.

106
42
Future Value - single sumsIf you deposit 100
in an account earning 6, how much would you have
in the account after 5 years?
43
Future Value - single sumsIf you deposit 100
in an account earning 6, how much would you have
in the account after 5 years?
PV FV
0 5
44
Future Value - single sumsIf you deposit 100
in an account earning 6, how much would you have
in the account after 5 years?
PV -100 FV
0 5

• Calculator Solution
• P/Y 1 I 6
• N 5 PV -100
• FV 133.82

45
Future Value - single sumsIf you deposit 100
in an account earning 6, how much would you have
in the account after 5 years?
PV -100 FV 133.82
0 5

• Calculator Solution
• P/Y 1 I 6
• N 5 PV -100
• FV 133.82

46

• How to do this
• Shift and clear.

47

• How to do this
• Shift and clear.

48

• How to do this
• Shift and clear.
• Compounding should be set for 1 period per year.

1 P_Yr
49

• How to do this
• Enter the other numbers in any order.

50

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.

-100
51

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.

-100
52

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 6 and push I/YR.

6
53

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 6 and push I/YR.
• Type 5 and push N.

5
54

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 6 and push I/YR.
• Type 5 and push N.
• Push FV to solve.

55

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 6 and push I/YR.
• Type 5 and push N.
• Push FV to solve.

133.82
56
Future Value - single sumsIf you deposit 100 in
an account earning 6 with quarterly compounding,
how much would you have in the account after 5
years?
57
Future Value - single sumsIf you deposit 100 in
an account earning 6 with quarterly compounding,
how much would you have in the account after 5
years?
PV FV
0 ?
58
Future Value - single sumsIf you deposit 100 in
an account earning 6 with quarterly compounding,
how much would you have in the account after 5
years?
PV -100 FV
0 20

• Calculator Solution
• P/Y 4 I 6
• N 20 PV -100
• FV 134.68

59
Future Value - single sumsIf you deposit 100 in
an account earning 6 with quarterly compounding,
how much would you have in the account after 5
years?
PV -100 FV 134.68
0 20

• Calculator Solution
• P/Y 4 I 6
• N 20 PV -100
• FV 134.68

60

• How to do this
• Shift and clear.

61

• How to do this
• Shift and clear.

1 P_Yr
62

• How to do this
• Shift and clear.
• Compounding should be set for 4 periods per year
  (quarterly compounding).

1 P_Yr
63

• How to do this
• Shift and clear.
• Compounding should be set for 4 periods per year
  (quarterly compounding).
• Type 4, push the shift key, and push PMT.

4
64

• How to do this
• Shift and clear.
• Compounding should be set for 4 periods per year
  (quarterly compounding).
• Type 4, push the shift key, and push PMT.
• Shift and clear.

4 P_Yr
65

• How to do this
• Enter the other numbers in any order.

66

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.

-100
67

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.

-100
68

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 6 and push I/YR.

6
69

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 6 and push I/YR.
• Type 20 and push N.

20
70

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 6 and push I/YR.
• Type 20 and push N.
• Push FV to solve.

71

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 6 and push I/YR.
• Type 20 and push N.
• Push FV to solve.

134.6855
72
Future Value - single sumsIf you deposit 100 in
an account earning 6 with monthly compounding,
how much would you have in the account after 5
years?
73
Future Value - single sumsIf you deposit 100 in
an account earning 6 with monthly compounding,
how much would you have in the account after 5
years?
PV FV
0 ?
74
Future Value - single sumsIf you deposit 100 in
an account earning 6 with monthly compounding,
how much would you have in the account after 5
years?
PV -100 FV
0 60

• Calculator Solution
• P/Y 12 I 6
• N 60 PV -100
• FV 134.89

75
Future Value - single sumsIf you deposit 100 in
an account earning 6 with monthly compounding,
how much would you have in the account after 5
years?
PV -100 FV 134.89
0 60

• Calculator Solution
• P/Y 12 I 6
• N 60 PV -100
• FV 134.89

76

• How to do this
• This is the same as the previous problem, except
  change P/YR to 12 for monthly compounding, and
  enter 60 (months) for N.

77
Future Value - continuous compoundingWhat is the
FV of 1,000 earning 8 with continuous
compounding, after 100 years?
78
Future Value - continuous compoundingWhat is the
FV of 1,000 earning 8 with continuous
compounding, after 100 years?
PV FV
0 ?
79
Future Value - continuous compoundingWhat is the
FV of 1,000 earning 8 with continuous
compounding, after 100 years?
PV -1000 FV
0 100

• Mathematical Solution
• FV PV (e in)
• FV 1000 (e .08x100) 1000 (e 8)
• FV 2,980,957.99

80
Future Value - continuous compoundingWhat is the
FV of 1,000 earning 8 with continuous
compounding, after 100 years?
PV -1000 FV 2.98m
0 100

• Mathematical Solution
• FV PV (e in)
• FV 1000 (e .08x100) 1000 (e 8)
• FV 2,980,957.99

81

• How to do this
• FV 1000 (ein)
• FV 1000 (e.08x100)
• Solve the exponent first
• Solve .08 x 100 8

82

• How to do this
• FV 1000 (ein)
• FV 1000 (e.08x100)
• Solve the exponent first
• Solve .08 x 100 8
• Push shift and 1 to use the e function.

2,980.9580
83

• How to do this
• FV 1000 (ein)
• FV 1000 (e.08x100)
• Solve the exponent first
• Solve .08 x 100 8
• Push shift and 1 to use the e function.
• Multiply by 1000.

2,980,957.9870
84

• Present Value

85
Present Value - single sumsIf you receive 100
one year from now, what is the PV of that 100 if
your opportunity cost is 6?
86
Present Value - single sumsIf you receive 100
one year from now, what is the PV of that 100 if
your opportunity cost is 6?
PV FV
0 ?
87
Present Value - single sumsIf you receive 100
one year from now, what is the PV of that 100 if
your opportunity cost is 6?
0 1

• Calculator Solution
• P/Y 1 I 6
• N 1 FV 100
• PV -94.34

88
Present Value - single sumsIf you receive 100
one year from now, what is the PV of that 100 if
your opportunity cost is 6?

• Calculator Solution
• P/Y 1 I 6
• N 1 FV 100
• PV -94.34

89

• How to do this
• Shift and clear.

90

• How to do this
• Shift and clear.

91

• How to do this
• Shift and clear.
• Compounding should be set for 1 period per year.

1 P_Yr
92

• How to do this
• Enter the other numbers in any order.

93

• How to do this
• Enter the other numbers in any order.
• Type 100 and push FV.

100
94

• How to do this
• Enter the other numbers in any order.
• Type 100 and push FV.

100
95

• How to do this
• Enter the other numbers in any order.
• Type 100 and push FV.
• Type 6 and push I/YR.

6
96

• How to do this
• Enter the other numbers in any order.
• Type 100 and push FV.
• Type 6 and push I/YR.
• Type 1 and push N.

1
97

• How to do this
• Enter the other numbers in any order.
• Type 100 and push FV.
• Type 6 and push I/YR.
• Type 1 and push N.
• Push PV to solve.

98

• How to do this
• Enter the other numbers in any order.
• Type 100 and push FV.
• Type 6 and push I/YR.
• Type 1 and push N.
• Push PV to solve.

-94.3396
99

• Note
• This means that 100 promised in one year is
  equivalent to 94.34 today.
• Dont be misled by the minus sign on the screen.
  The calculator is programmed to show cash
  outflows as negative and cash inflows as positive.

-94.3396
100
Present Value - single sumsIf you receive 100
5 years from now, what is the PV of that 100 if
your opportunity cost is 6?
101
Present Value - single sumsIf you receive 100
5 years from now, what is the PV of that 100 if
your opportunity cost is 6?
PV FV
0 ?
102
Present Value - single sumsIf you receive 100
5 years from now, what is the PV of that 100 if
your opportunity cost is 6?

• Calculator Solution
• P/Y 1 I 6
• N 5 FV 100
• PV -74.73

103
Present Value - single sumsIf you receive 100
5 years from now, what is the PV of that 100 if
your opportunity cost is 6?

• Calculator Solution
• P/Y 1 I 6
• N 5 FV 100
• PV -74.73

104

• How to do this
• This is the same as the previous problem, except
  you should enter 5 for N, to reflect a five-year
  time line.

105
Present Value - single sumsWhat is the PV of
1,000 to be received 15 years from now if your
opportunity cost is 7?
106
Present Value - single sumsWhat is the PV of
1,000 to be received 15 years from now if your
opportunity cost is 7?
107
Present Value - single sumsWhat is the PV of
1,000 to be received 15 years from now if your
opportunity cost is 7?

• Calculator Solution
• P/Y 1 I 7
• N 15 FV 1,000
• PV -362.45

108
Present Value - single sumsWhat is the PV of
1,000 to be received 15 years from now if your
opportunity cost is 7?

• Calculator Solution
• P/Y 1 I 7
• N 15 FV 1,000
• PV -362.45

109

• How to do this
• Shift and clear.

110

• How to do this
• Shift and clear.

111

• How to do this
• Shift and clear.
• Compounding should be set for 1 period per year.

1 P_Yr
112

• How to do this
• Enter the other numbers in any order.

113

• How to do this
• Enter the other numbers in any order.
• Type 1000 and push FV.

1000
114

• How to do this
• Enter the other numbers in any order.
• Type 1000 and push FV.

1000
115

• How to do this
• Enter the other numbers in any order.
• Type 1000 and push FV.
• Type 7 and push I/YR.

7
116

• How to do this
• Enter the other numbers in any order.
• Type 1000 and push FV.
• Type 7 and push I/YR.
• Type 15 and push N.

15
117

• How to do this
• Enter the other numbers in any order.
• Type 1000 and push FV.
• Type 7 and push I/YR.
• Type 15 and push N.
• Push PV to solve.

118

• How to do this
• Enter the other numbers in any order.
• Type 1000 and push FV.
• Type 7 and push I/YR.
• Type 15 and push N.
• Push PV to solve.

-362.446
119
Present Value - single sumsIf you sold land for
11,933 that you bought 5 years ago for 5,000,
what is your annual rate of return?
120
Present Value - single sumsIf you sold land for
11,933 that you bought 5 years ago for 5,000,
what is your annual rate of return?
121
Present Value - single sumsIf you sold land for
11,933 that you bought 5 years ago for 5,000,
what is your annual rate of return?

• Calculator Solution
• P/Y 1 N 5
• PV -5,000 FV 11,933
• I 19

122

• How to do this
• Shift and clear.

123

• How to do this
• Shift and clear.

124

• How to do this
• Shift and clear.
• Compounding should be set for 1 period per year.

1 P_Yr
125

• How to do this
• Enter the other numbers in any order.

126

• How to do this
• Enter the other numbers in any order.
• Type 5000, push /-, and push PV.

-5000
127

• How to do this
• Enter the other numbers in any order.
• Type 5000, push /-, and push PV.

-5000
128

• How to do this
• Enter the other numbers in any order.
• Type 5000, push /-, and push PV.
• Type 11933 and push FV.

11,933
129

• How to do this
• Enter the other numbers in any order.
• Type 5000, push /-, and push PV.
• Type 11933 and push FV.
• Type 5 and push N.

5
130

• How to do this
• Enter the other numbers in any order.
• Type 5000, push /-, and push PV.
• Type 11933 and push FV.
• Type 5 and push N.
• Push I/YR to solve.

131

• How to do this
• Enter the other numbers in any order.
• Type 5000, push /-, and push PV.
• Type 11933 and push FV.
• Type 5 and push N.
• Push I/YR to solve.

19.0025
132
Present Value - single sumsSuppose you placed
100 in an account that pays 9.6 interest,
compounded monthly. How long will it take for
your account to grow to 500?
133
Present Value - single sumsSuppose you placed
100 in an account that pays 9.6 interest,
compounded monthly. How long will it take for
your account to grow to 500?

• Calculator Solution
• P/Y 12 FV 500
• I 9.6 PV -100
• N 202

134
Present Value - single sumsSuppose you placed
100 in an account that pays 9.6 interest,
compounded monthly. How long will it take for
your account to grow to 500?

• Calculator Solution
• P/Y 12 FV 500
• I 9.6 PV -100
• N 202 months

135

• How to do this
• Shift and clear.

136

• How to do this
• Shift and clear.

137

• How to do this
• Shift and clear.
• Compounding should be set for 12 periods per year.

12 P_Yr
138

• How to do this
• Enter the other numbers in any order.

139

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.

-100
140

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.

-100
141

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 500 and push FV.

500
142

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 500 and push FV.
• Type 9.6 and push I/YR.

9.6
143

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 500 and push FV.
• Type 9.6 and push I/YR.
• Push N to solve.

144

• How to do this
• Enter the other numbers in any order.
• Type 100, push /-, and push PV.
• Type 500 and push FV.
• Type 9.6 and push I/YR.
• Push N to solve.

201.9834