Financial Calculations on the TI-84

The TI-84 calculator offers powerful built-in features for simplifying financial calculations. Navigating the Finance menu allows you to tackle problems related to time value of money, amortization, and even break-even analysis. This guide will walk you through the basics of using the Finance app.

Accessing the Finance Menu

Press the APPS button on your calculator. Scroll down until you see Finance... and press ENTER. This brings you to the Finance application menu.

Time Value of Money (TVM) Solver

The TVM Solver is your primary tool for handling investments, loans, and savings scenarios. Select TVM Solver... from the Finance menu. You will see the following variables:

• N: Number of compounding periods (e.g., number of months in a loan term).
• I%: Annual interest rate (as a percentage).
• PV: Present value (e.g., initial loan amount or investment). Enter as a negative if it’s an outflow of cash.
• PMT: Payment amount per period. Enter as a negative if you are paying out money.
• FV: Future value (e.g., target amount after saving or loan balance at the end).
• P/Y: Payments per year.
• C/Y: Compounding periods per year. Generally, P/Y and C/Y are the same.
• PMT: END or BEGIN (Specifies whether payments are made at the end or beginning of the period. Most loans are END).

To solve for an unknown variable, enter the known values, move the cursor to the variable you want to solve for, and press ALPHA then SOLVE (the ENTER button). The calculator will then compute the unknown value. Always double-check that your present value (PV) and future value (FV) have the correct sign, as this impacts the result.

Amortization Schedule

The TI-84 can also generate an amortization schedule. After calculating the PMT in the TVM Solver, return to the Finance menu and select Amortization. You’ll be prompted for:

• P1: The starting period for the amortization schedule.
• P2: The ending period for the amortization schedule.

The calculator will then display the principal and interest paid during that range of periods, and the remaining balance. Press the up and down arrows to scroll through detailed amortization information.

Example: Loan Payment Calculation

Suppose you want to take out a $20,000 loan at a 6% annual interest rate for 5 years, compounded monthly. You want to find the monthly payment.

1. Access the TVM Solver.
2. Enter the following values:
   • N: 60 (5 years * 12 months/year)
   • I%: 6
   • PV: 20000
   • FV: 0
   • P/Y: 12
   • C/Y: 12
   • PMT: END
3. Move the cursor to PMT, press ALPHA, then SOLVE.
4. The calculator displays PMT: -386.66 (approximately).

Therefore, your monthly payment would be approximately $386.66.

Tips for Accuracy

• Ensure the P/Y and C/Y values are set correctly based on the compounding frequency.
• Be mindful of the signs of PV, PMT, and FV. Use negative signs for cash outflows and positive signs for cash inflows.
• Round off only at the final answer. Using rounded intermediate values can lead to significant errors.

The TI-84’s Finance app provides a convenient way to perform various financial calculations, empowering you to make informed decisions about loans, investments, and savings.