Financial Calculations And The Cash Flow Diagram - HP 12C Platinum Owner's Handbook Manual

36 Section 3: Basic Financial Functions
basis. What is the amount of accrued interest he will owe you in 60 days, and
what is the total amount owed?
Keystrokes (RPN mode)
60n
7¼
450Þ$
fÏd~
+

Financial Calculations and the Cash Flow Diagram

The concepts and examples presented in this section are representative of a wide
range of financial calculations. If your specific problem does not appear to be
illustrated in the pages that follow, don't assume that the calculator is not capable
of solving it. Every financial calculation involves certain basic elements; but the
terminology used to refer to these elements typically differs among the various
segments of the business and financial communities. All you need to do is
identify the basic elements in your problem, and then structure the problem so
that it will be readily apparent what quantities you need to tell the calculator and
what quantity you want to solve for.
An invaluable aid for using your calculator in a financial calculation is the cash
flow diagram. This is simply a pictorial representation of the timing and
direction of financial transactions, labeled in terms that correspond to keys on
the calculator.
The diagram begins with a horizontal line, called a time line. It represents the
duration of a financial problem, and is divided into compounding periods. For
example, a financial problem that transpires over 6 months with monthly
compounding would be diagrammed like this:
The exchange of money in a problem is depicted by vertical arrows. Money you
receive is represented by an arrow pointing up from the point in time line when
the transaction occurs; money you pay out is represented by an arrow pointing
down.
Display
If you have not altered the
60.00
numbers in the n, i, and PV
7.00
registers since the preceding
–450.00
example, you may skip these
keystrokes.
Accrued interest, 365-day
5.18
basis.
Total amount: principal plus
455.18
accrued interest.