HP·38E/38C - Slide Rule Museum

30 The Financial Functions
Financial Interest Calculations
The applications and examples here are representative of a wide range of
possible calculations. If your specific problem is not included in the
pages that follow, don 't assume that your calculator won' t solve it.
Many problems in finance involve terminology that differs from industry
to industry. The basic concepts are the same, but we all speak our own
language, the vernacular of our profession.
The financial symbols n, i, PMT, PV, and FV, along with the concepts
of simple and compound interest, amortization, and discounted cash
flow analysis are explained in Your HP Financial Calculator: An
Introduction to Financial Concepts and Problem Solving. We strongly
encourage you to read the financial section of the book as it includes a
discussion on how to solve virtually any compound interest problem
with your calculator by using a cash flow diagram. A cash flow diagram
enables you to describe a compound interest problem in terms
that the calculator can understand. Once you draw and label your
diagram, you simply key in the known data and solve for an unknown
value.
If the solution to your problem isn 't evident at first, construct a cash
flow diagram-a picture of money received and money paid out.
Money paid out
Money received
Once you' ve done this, label your diagram with all of the known data
that pertains to the problem: interest rate, duration of the transaction,
number of compounding periods, payment amounts, amount of the loan
or investment, etc. Instead of "What is my problem?" ask yourself,
" What are the cash flows?"