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LU1.1 Use of The Financial Calculators

This document provides a guide on using the Hewlett Packard 10BII and Sharp EL 735 financial calculators, detailing key variables and functions for financial calculations such as Present Value (PV), Future Value (FV), and amortized loans. It emphasizes the importance of setting the number of payments per year and clarifies how to convert nominal interest rates to effective rates. Additionally, it covers how to adjust settings for payments made at the beginning or end of a period and the specific input requirements for each calculator model.

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Ayandiswa Ndebele
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30 views4 pages

LU1.1 Use of The Financial Calculators

This document provides a guide on using the Hewlett Packard 10BII and Sharp EL 735 financial calculators, detailing key variables and functions for financial calculations such as Present Value (PV), Future Value (FV), and amortized loans. It emphasizes the importance of setting the number of payments per year and clarifies how to convert nominal interest rates to effective rates. Additionally, it covers how to adjust settings for payments made at the beginning or end of a period and the specific input requirements for each calculator model.

Uploaded by

Ayandiswa Ndebele
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Use of the financial calculators:

This serves as a brief introduction on how to use the Hewlet Packard 10BII & Sharp EL 735
financial calculators. For a detailed explanation please refer to the operator’s manual.

The Hewlet Packard 10BII


When you are working with financial calculations there are normally 6 variables.

N >>>>>> The number of periods applicable. (Can be days, months, etc)


I/YR >>>> The applicable interest rate.
PV >>>>> The present value.
PMT>>>> The applicable payment.
FV>>>>> The applicable future value.
P/YR >>> The number of payments per year.

Please note that for certain calculations some of these variables might have a value of Zero.

Before attempting any financial calculation please confirm the payments per year. P/YR (This
also clears all previous stored data)

Press second function C. The calculator will briefly show the current setting. For example 12
P/YR.

If you want to change this press the number of payment you require i.e. 5 second function
P/YR.

The calculation of a Present Value (PV).


Set the appropriate P/YR
Enter the applicable variables
N
I/YR
PMT
FV
If a certain variable is not applicable enter a zero value.

After you have entered all the applicable variable press PV.
The Present value will be shown on the display.

The exact same applies to the calculation of any of the above, enter all the variables and then
press then required function i.e. PV, FV, N etc.
IMPORTANT: The PV and the FV will always have opposing signs + or – as will the PMT
and FV. When you for example want to do an interest calculation were both the PV &
PMT are given one must be entered as a – value.

1
How to convert Nominal to Effective interest rates:
Set the appropriate P/YR

Enter the “Given” interest rate i.e. 12 . Press second function followed by either NOM%
(Nominal) or EFF% (Effective) depending on what was given to you. Lest assume the 12 was
a Nominal amount and you want the Effective interest rate press second function EFF%. If
you were given the Nominal and want the effective the steps are just reversed.

Amortized Loans:
Set the appropriate P/YR
Enter the applicable variables
N
I/YR
PV
PMT
FV
Normally, depending on the question you would first have to calculate the payment (PMT).

After the PMT is calculated and displayed press Second Function AMORT

Your calculator now shows you the time frame i.e. 1-12 this normally represents one year.
Press = ,in the screen you will see the heading “PRIN” and a numerical value. This represents
the total amount of capital that was paid back on the original loan during the period (1-12).
Press = again in the screen you will see the heading “INT”. This represents the total amount
of interest that was paid during the applicable period. Press = , again the heading “BAL” will
appear, this is the outstanding balance of the capital portion of the loan that is still to be repaid.
To see the next period (13 – 24) just press second function AMORT again etc.

If you want to change the time frame, for example you want to know what the total of the
Interest and capital repayments was for period 5 – 12 press the following 5 input 12 second
function AMORT.
This is especially important if you have to deal with a lease that commenced during the
financial year instead of at the beginning of the year.

Payments at the beginning or end of a period:


When working with any financial calculation that includes a payment “PMT” confirm when the
first payment is made. A first payment made at the beginning or the end of the applicable
period will influence your calculations.
To change your calculator from a first payment that occurs at the end of the first period (The
default setting) to a payment that is made at the beginning press second function BEG/END.
The word “BEGIN” will appear in the display.

2
The Sharp EL735
When you are working with financial calculations there are normally 6 variables.

N >>>>>> The number of periods applicable. (Can be days, months, etc)


I >>>>>> The applicable interest rate.
PV >>>>> The present value.
PMT>>>> The applicable payment.
FV>>>>> The applicable future value.
P/YR >>> The number of payments per year.

Please note: The P/YR function is absent on the Sharp and has to be done manually also
remember that for certain calculations some of these variables might have a value of Zero.

The calculation of a Present Value (PV).


Enter the applicable variables
N
I (first calculate the interest per period)
PMT
FV
If a certain variable is not applicable enter a zero value.

After you have entered all the applicable variable press COMP PV.
The Present value will be shown on the display.

The exact same applies to the calculation of any of the above, enter all the variables and then
press then required function i.e. PV, FV, N etc.

IMPORTANT: The PV and the FV will always have opposing signs + or – as will the PMT
and FV.
When you for example want to do an interest calculation were both the PV & PMT are
given one must be entered as a – value.

Because the Sharp does not have a payment per year function it is important that you
input these manually.

For example: if you work with a one year loan with monthly installments and a nominal
interest rate of 12% compounded monthly the inputs for the Sharp would be

N >>> 12
I >>> 1

I.e. 1 present interest per period for 12 periods = 12% the calculator will compound
automatically to an effective interest rate of 12,68%

3
How to convert Nominal to Effective interest rates:
To calculate the Effective interest rate from a Nominal interest rate: Enter the number of
periods >>> second function EFF >>> followed by the nominal rate >>> then = the
effective interest rate will now be shown in the screen.

Amortized Loans:
Enter the applicable variables
N
I/YR
PV
PMT
FV
Normally, depending on the question you would first have to calculate the payment (PMT).

After the PMT is calculated and displayed press 1 AMRT,in the screen you will see the
heading “PRIN” and a numerical value. This represents the amount of capital that was paid
back on the original loan during the specific period Press AMRT again in the screen you will
see the heading “INT”. This represents the amount of interest that was paid during the
applicable period. Press AMRT, again the heading “BAL” will appear, this is the outstanding
balance of the capital portion of the loan that is still to be repaid.

If you want to change the time frame, for example you want to know what the total of the
Interest and capital repayments was for period 5 – 12 press the following 5 P1/P2 12 P1/P2.

Now press ACC this will display the cumulative capital that has been paid for that specific
periods, by pressing ACC again it shows the cumulative amount of interest paid for that
specific periods

This is especially important if you have to deal with a lease that commenced during the
financial year instead of at the beginning of the year.

Payments at the beginning or end of a period:


When working with any financial calculation that includes a payment “PMT” confirm when the
first payment is made. A first payment made at the beginning or the end of the applicable
period will influence your calculations.
To change your calculator from a first payment that occurs at the end of the first period (The
default setting) to a payment that is made at the beginning press BGN. The word “BGN” will
appear in the display.

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