Hi all,
I am new to this forum. Recently, I am excited by the HP 15C limited edition and trying to recall the memory of using my Singapore version of HP 12C as well.
Back to the subject, I want to calculate the principal which will accumulate to $10,000 at simple rate 7% p.a. over two years.
FV = 10,000
i = 7
n =2
The PV is calculated as -8,734.39.
As you may know, this is not correct given the formula PV*(1+2*0.07)=10,000. The correct PV should be 8,771.93
I figure out that it is the default compound interest calculation in HP 12C.
My question is that is there a way to make HP 12C use simple interest method to work out the PV? I understand there is a key STO EEX for old period calculation but it seems that is not useful here.
I would appreciate your assistance. Many thanks.
Sam
Hello Sam,
the formula used by HP 12C accumulates the interest:
PV*(1+0.07)^2 = 10,000
So you get PV = 10,000/1.07^2 = 8734,39. That is exactly what the calc you told.
The situation you calculate is different.
greetings peacecalc
Hi peacecalc,
Thanks so much for your assistance. I did not expect to get it so quick.
I understand what you said is right that I told the HP 12C to calculate like this.
However, this is because i do not know how to tell the calculator to work the PV out in a simple interest calculation.
The denominator 1.07^2 is the compound interest method, i.e., (1+0.07)*(1+0.07).
But I like to calculate this in the simple interest method which should be:
PV*(1+0.07*2)=10,000
Perhaps I should not use the financial register to work this out. A simple formula below is ok
10,000 enter
0.07 enter
2
x
1
+
/
Best regards,
sam
Quote:
Perhaps I should not use the financial register to work this out.
Well, although TVM calculators are usually not used for 'simple' compoundings (that's just _too_ simple ;-)), you _can_ do it if you really want:
You only need to always set n=1 and enter n*i for i, that's all.
Franz
Hi Sam,
one can still use the financial registers for a simple interest calculation.
You just need to use a "total interest rate" by multiplying the yearly interest rate by the number of years and then use n = 1:
10,000 FV
0.07 ENTER
2 x i
1 n
PV
This should give you PV = -8,771.93 as requested.
Kind regards,
Thomas
Thanks for all. The method n=1 and treatment of i is useful although it is a bit odd.
Sam
Quote:
The method n=1 and treatment of i is useful although it is a bit odd.
No, it's not odd at all. Odd is using a TVM calculator for a problem with a simple (i.e. not compounded) interest rate. ;-)
Franz