Before you begin to read through this handbook, let's take a look at how easy
financial calculations can be with your hp 12c platinum. While working through
the examples below, don't be concerned about learning how to use the calculator;
we'll cover that thoroughly beginning with Section 1.
Example 1: Suppose you want to ensure that you can finance your daughter's
college education 14 years from today. You expect that the cost will be about
$6,000 a year ($500 a month) for 4 years. Assume she will withdraw $500 at the
beginning of each month from a savings account. How much would you have to
deposit into the account when she enters college if the account pays 6% annual
interest compounded monthly ?
This is an example of a compound interest calculation. All such problems involve at
least three of the following quantities:
n: the number of compounding periods.
i: the interest rate per compounding period.
PV: the present value of a compounded amount.
PMT: the periodic payment amount.
FV: the future value of a compounded amount.
In this particular example:
n is 4 years × 12 periods per year = 48 periods.
i is 6% per year ÷ 12 periods per year = 0.5% per period.
PV is the quantity to be calculated — the present value when the financial
PMT is $500.
FV is zero, since by the time your daughter graduates she (hopefully!) will
not need any more money.
To begin, turn the calculator on by pressing the ; key. Then, press the keys
shown in the Keystrokes column below.
If you are not familiar with the use of an hp calculator keyboard, refer to the description on
pages 16 and 17.