Tutoring math, the uptick in interest about financial math doesn’t go unnoticed.  The tutor responds.

The TI-83 Plus, aka the graphing calculator, has a time value of money solver.  When you press APPS, then select FINANCE, it’s the first choice (on my calculator, anyway).

The TI-83 Plus TVM solver is great, but it can be tricky. Depending on your point of view, understanding its use of negative signs might take some adaptation. I’ll open the issue with an example.

Example 1: Imagine a loan of 30 000, repayable by monthly payments over four years at nominal interest of 6.4%, compounded monthly. Payments are made at the end of the month. Find the monthly payment.

Solution:

Pressing APPS, then selecting FINANCE, you next select TVM Solver. A list of parameters appears wherein you can input your particular values:

N (the total number of loan payments): For our example, you can enter 48 or 4×12.

I%: the nominal interest: 6.4 for this example.

PV: the present value of the loan: 30 000

PMT: skip over this one for now.

FV: the future value of the loan. 0, since it will be paid in full.

P/Y: payments per year: 12 (monthly payments)

C/Y: compoundings per year: 12 (monthly compounding)

PMT: BEGIN END: means payments are made at the beginning or end of the month. For this example, select END.

Now, go back up to PMT, which you left blank before. Press ALPHA ENTER. You’ll see -706.29883…., which means that the monthly payment in this context is 706.30.

From the TI-83 Plus TVM solver’s point of view, if a loan has positive value, then payments against it are negative. Hence, the 30 000 loan generates a monthly payment of -706.30. If you enter -30 000 for the PV of the loan, then the payment will be 706.30.

The TVM solver’s handling of payments versus amounts – by use of negative signs – can be even more complicated in some cases. I’ll be looking at some in future posts:)

Jack of Oracle Tutoring of Jack and Diane, Campbell River, BC.