Cash Flow Diagrams - Sharp EL-9650 Operation Manual

(2) Cash flow diagrams

Cash flow diagrams show cash flow by time in a form of a diagram. Cash flow diagrams
are created with the following items in mind.
• Time flow is indicated using a horizontal line. Time flow moves from left to right. Time
is divided into even sections (day, month, quarter periods, half year, year, etc.). Each
section indicates a compound interest period and the total number of sections
indicates the total number of periods.
• Cash flow is indicated using a vertical line with arrows. Inflow of cash is indicated
using a UP arrow as plus and outflow of cash is indicated using a DOWN arrow as
minus.
• For this calculator, the cash flow for each period is considered the same (even
payment).
For example, the cash flow diagram used to find the principal sum total of standard
compound interest would look like this:
(+)
Cash flow
(–)
PV (present value)
Since the present value (PV) is deposited into the bank, it is considered an outflow
(payment) from the customer's point of view. Thus, a vertical line with an arrow is drawn
on the bottom (minus) of the diagram. Since principal interest total is received from the
bank, it is considered an inflow (revenue) from the customer's point of view. Thus, a
vertical line with an arrow is drawn on the top of the diagram.
Diagrams for deposits and loan payments have payment due at the beginning and end
of each period. Thus, producing a cash flow diagram is somewhat different than that
described above.
(Payment due at the end of period)
PMT (deposited amount)
When executing financial calculations, it is recommended to display contents using
such cash flow diagrams to simplify problems for easier calculations.
Time flow
(Payment due at the beginning of period)
PMT (deposited amount)
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FINANCIAL FUNCTIONS
FV (Future value)