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Picturing Financial Problems; How To Approach A Financial Problem - HP 10bII+ User Manual

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Picturing Financial Problems

How to approach a Financial Problem

The financial vocabulary of the HP 10bII+ is simplified to apply to all financial fields. For
example, your profession may use the term balance, balloon payment, residual, maturity
value, or remaining amount to designate a value that the HP 10bII+ knows as
value).
The simplified terminology of the HP 10bII+ is based on cash flow diagrams. Cash flow
diagrams are pictures of financial problems that show cash flows over time. Drawing a cash
flow diagram is the first step to solving a financial problem.
The following cash flow diagram represents investments in a mutual fund. The original
investment was 7,000.00, followed by investments of 5,000.00 and 6,000.00 at the end of
the third and sixth months. At the end of the 1 1
th
of the 16
month, 16,567.20 was withdrawn.
Any cash flow example can be represented by a cash flow diagram. As you draw a cash flow
diagram, identify what is known and unknown about the transaction.
Time is represented by a horizontal line divided into regular time periods. Cash flows are
placed on the horizontal line when they occur. Where no arrows are drawn, no cash flows
occur.
th
month, 5,000.00 was withdrawn. At the end
Figure 2 Cash flow diagram
É
(future
Picturing Financial Problems
55

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