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FIGURE 4.3
Financial Tables
Layout and use
of a financial table
FIGURE 4.4
Calculator Keys
Important financial keys
on the typical calculator
Period
1
2
3
10
20
50
1%
CHAPTER 4 Time Value of Money 133
indexed by the interest rate (in columns) and the number of periods (in rows).
Figure 4.3 shows this general layout. The interest factor at a 20 percent interest
rate for 10 years would be found at the intersection of the 20% column and the
10-period row, as shown by the dark blue box. A full set of the four basic financial
tables is included in Appendix A at the end of the book. These tables are
described more fully later in the chapter.
Financial Calculators
Interest Rate
2% 10% 20%
X.XXX
Financial calculators also can be used for time value computations. Generally,
financial calculators include numerous preprogrammed financial routines. This
chapter and those that follow show the keystrokes for calculating interest factors
and making other financial computations. For convenience, we use the important
financial keys, labeled in a fashion consistent with most major financial
calculators.
We focus primarily on the keys pictured and defined in Figure 4.4. We typically
use four of the first five keys shown in the left column, along with the
compute (CPT) key. One of the four keys represents the unknown value being
N
I
PV
PMT
FV
CPT
50%
N — Number of periods
I — Interest rate per period
PV — Present value
PMT — Amount of payment (used only for annuities)
FV — Future value
CPT — Compute key used to initiate financial calculation
once all values are input