| So you got
a calculator . . . well that really don't impress anyone,
particularly if you don't know how to get it to work
for you! but sometimes if you're so confused that you
just want to go back to Abacus! and quite frankly I
don't blame you! but for most part, we can't afford
such drastic measures and need emergency help with
our calculators. So I hope you'll find the following
information helpful.
|
| Introduction The fundamentals of the
calculators are quite simple, what, however, makes it
hard is to get each different brand to work for you.
In following you will find links for some of most
commonly used ones. But as far as the basics goes,
here it is:
- Each
calculator has five primary buttons:
- The
or, the Present
Value button basically takes the
initial value of anything. This is useful
to compute future values, yields, number
of payments or amount of payment. Most
calculators are sensitive to the sign of
this number, and so you are safer if you
define it as a negative number.
- The
or, the Future
Value button basically takes the
accumlated value of anything at the end
of planning period, like the accumulated
amount in a retirement fund, baloon
payments for bonds, etc. This is useful
to compute present values, yields, number
of payments or amount of payment. For
this variable you should plug in a positive
number.
- The or, the Payment button
basically takes the periodic equal
payment that is being made during the
planning period, like contributions to a
retirement fund, coupon payments for
bonds, etc. This is useful to compute
present values, future values, yields, or
number of payments. For this variable you
should plug in a positive number.
- The or, the Interest
Rate / Yield button basically
takes the yield to maturity or relevent
discount rate over the planning period,
like equity rate of return, yield to
maturity of bonds, etc. This is useful to
compute present values, future values,
number of payments or amount of payment.
For this variable you should plug in a positive
number in percentage term. Note that this
number corresponds to the compounding
period. If you don't manually change the
settings, most calculators assume that
the compounding period is ONE year. So if
you are compounding for a month, then the
actual amount that goes to this button is
annual rate divided by 12.
- The
or, the Number
of Payments button basically
takes number of payment (equivalently;
number of compounding periods) over the
planning period, like number of months
that contributions are made to the
retirement fund, number of quarters that
coupon payments of a bond is made, etc.
This useful to compute present values,
future valules, yields, or amount of
payment. For this variable you should
plug in a positive number.
Thanks to the
efforts of Dr. Kinsman at Pepperdine University, now
you can find more specific information for the
following models which is helpful.
|