SOLUTION TO EXERCISE D-3
*ILLUSTRATION D-4 USING FINANCIAL CALCULATORS (L.O. 8)
Once you have mastered the underlying concepts in this chapter, you will find it extremely beneficial to learn how to solve time value of money problems by using a financial calculator. A business professional uses a financial calculator rather than the tables used in this chapter because most business applications involve an interest rate or time periods not provided in the interest tables. For example, most real life problems involve interest compounded monthly or daily. Thus a 6% annual rate compounded monthly for 5 years requires our calculations to use a .5% rate (not provided in the tables) for 60 periods (not provided in the tables). The most common keys used to solve time value of money problems are:
where
On many calculators, these keys are actual buttons on the face of the calculator, on others, ...
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