To select the financial functions, press
and select Financial mode from the *Mode* tab, or use shift then the
button. The title bar ends with *[fin]* when you are in financial
mode. You can also use the *Display* tab to select commas to separate
thousands. In Financial mode, numbers are always displayed with a fixed
point and two decimal places.

In financial mode, some of the scientific functions are replaced by the financial functions. These fall into two groups: those concerned with calculating compound interest on loans, and those used for budgeting.

The bank interest rate is applied to the loan calculations (,, and ) and the discount rate to the Net Present Value calculations ( and ). Typically these will be assigned different values which prevail at the time and in the relevant field of commerce.

It is assumed that the period in these calculations is one year. If
a different period is required (monthly for example), then the rates should
be adjusted to their equivalent monthly rates. To make
this easier, there are two buttons marked **Annual->Monthly** and **Monthly->Annual**.
Typically, you would enter an annual interest rate in the two boxes, and
then click on the **Annual->Monthly **button to convert to the equivalent
monthly rate (by dividing by 12). You can convert back
to annual using the **Monthly->Annual **button. Each
click divides or multiplies the rate by 12.

Other periods can also be used, but you will need to enter the appropriate rate for the time period. Often the rate is known for some other period and the required rate will need to be calculated. This can be done by using the calculator and cutting and pasting. Be careful to select decimal mode to compute interest rates before copying, because the financial mode will truncate the result to two decimal places which may not be sufficiently accurate.

Example:

How many years of compound interest are required for an initial investment
of $100 to reach the value of $200 (assuming 10% bank interest rate)?

**1 0 0 2 0 0 **

Result: 7.27 (i.e. 8 years to exceed $200).

Despite the literal meaning of the word annuity, it is possible to use a period other than annual in the calculation, in which case you need to change the value of the interest rate accordingly, by pressing .

Example:

What is the value at maturity of a 30 year annuity with an annual payment
of $200 (assuming an interest rate of 10%)?

**2 0 0
3 0 **

Result: $32898.80

Example:

What is the monthly payment to pay off a loan of $30,000 dollars over
25 years at an interest rate of 10% ?

First click on to check that the interest rate is set to 10% (and change it if needed), and click on Annual->Monthly. The interest rate displayed changes to 0.83333...%.

The period is now in months, which over 25 years is 25x12 months (i.e. 300 months).

**3 0 0 0 0
2 5
12 **

Result: $272.61 (the monthly payment)

Example:

What is the value of $100 invested for five years at compound interest
(assuming a 10% annual interest rate)?

**1 0 0
5 **

Result: $161.05

You can enter a negative number of periods, in which case you get the present value of a payment which was paid at some time in the past. If you require the net present value of a series of periodic cash flows, use.

Example:

What is the net present value of $100 to be paid in five years time
(assuming 5% discount rate).

**1 0 0 5 **

Result: $78.35

Typically the period is annual. If you wish to use a different period (monthly for example) you need to change the value of the discount rate accordingly, by pressing . It is also permitted to alter the discount rate during the calculation (i.e. rate differs for different periods). If you require the net present value of a single cash flow at some point in the future, use the button instead.

Example:

A project requires an initial capital expenditure of $1,000,000. After
five years the capital equipment is to be written off. The expected annual
revenue stream, less running costs, is: year 1 - $100,000; year 2 - $200,000,
year 3 - $300,000, year 4 - $300,000, year 5 - $300,000. The net revenues
exceed the initial capital cost, but is the investment a good one, assuming
a discounting rate of 5% per annum?

**1 0 0 0 0 0 **
**2 0 0 0 0 0 **
**3 0 0 0 0 0 **
(Intermediate result: $535795.27 in display)
**3 0 0 0 0 0 **
**3 0 0 0 0 0 **

Result: $1017663.86

The result shows that, taking into account the time value of money, the revenue flows have a net present value of $1017663.86, so that the project is just profitable (but probably not worth the risk!).

Usually the number of periods is the number of years. If you wish to use a different period (monthly for example) you need to change the value of the discount rate accordingly, by pressing .

Example:

What is the depreciation after five years on a capital asset costing
$10,000 with a ten year life and a salvage value of $1000 at the end of
its life?

**1 0 0 0 0 1
0 0 0 **

Result: $9000.00

**
1 0 5 **

Result: $4500.00

The depreciation is $4500, therefore the value of the asset after 5 years is $10000 - $4500 = $5500.00

Usually the number of periods is the number of years. If you wish to use a different period (monthly for example) you need to change the value of the discount rate accordingly, by pressing .

Example:

What is the depreciation after five years on a capital asset costing
$10,000 with a ten year life and a salvage value of $1000 at the end of
its life?

**1 0 0 0 0 1
0 0 0 **

Result: $9000.00

**
1 0 5 **

Result: $6030.00

The depreciation is $6030, therefore the value of the asset after 5 years is $10000 - $6030 = $3970.00

Usually the number of periods is the number of years. If you wish to use a different period (monthly for example) you need to change the value of the discount rate accordingly, by pressing .

Example:

What is the depreciation after five years on a capital asset costing
$10,000 with a ten year life and a salvage value of $1000 at the end of
its life?

**1 0 0 0 0 1
0 0 0 **

Result: $9000.00

**
1 0 5 **

Result: $6570.00

The depreciation is $6570, therefore the value of the asset after 5 years is $10000 - $6570 = $3430.00