Finance becomes a heck of a lot easier when we know how to use our financial calculator. This is a walkthrough of how to use the Queen's University recommended finance calculator (SHARP EL-738XT).
Before diving into the calculator itself, let's break down the key financial variables you'll frequently use:
N: Represents the total number of payments or periods. For instance, if you're considering a 5-year loan with monthly payments, N would be 5 x 12 = 60.
I/Y: Stands for the interest rate per year.
PV: The present value, or the initial amount of money. In investment scenarios, this could be the initial investment. In loan scenarios, it's the loan amount.
PMT: This denotes the payment amount per period. For annuities or loans, it represents the regular payment amount.
FV: Future Value. If you're thinking about how much an investment will be worth in the future, this is the number you're after.
P/Y: Payments per year. For monthly payments, this would be 12. For quarterly, it would be 4.
C/Y: Compounding periods per year. This is how often interest is added to the balance. For daily compounding, it would be 365. For monthly, 12.
Turning it on and off:
Inputting Financial Values:
Setting Payments and Compounding Periods:
Switching Between Annuity Due and Ordinary Annuity:
Imagine you're considering a 4-year car loan of $15,000 at an annual interest rate of 5%, with monthly payments. You want to find out your monthly payment.
Steps:
Once you've inputted all the details, your calculator will give you the monthly payment you'll need to make to repay this loan in 4 years
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