27
Calculating present v
alue
Y
ou open an account that ear
ns 5% compounded ann
ually
. If
y
ou wish to ha
v
e
$10,000 tw
enty y
ears from no
w
, what amount
of mone
y should y
ou deposit no
w?
FV = $10,000
N = 20 y
ears
PV = ?
I/Y = 5%
Pr
ocedure
K
e
y
operation
Displa
y
Set all the v
a
riab
les to
def
ault v
alues
.
.
b
000
Mak
e sure ordinar
y ann
uity is set (
BGN
is not displa
y
ed).
Set the n
umber of pa
y-
ments per y
ear to 1.
.
w
1
Q
P/Y=
100
The n
umber of compounding per
iods per y
ear is automatically set to 1.
Press
s
to e
xit the P/Y and C/Y settings
.
Enter the total n
umber
of pa
yments
.
s
20
N
2—~N
2000
Enter the future v
alue
.
10000
T
1————~FV
1000000
Set pa
yment to z
ero
.
0
u
—~PMT
000
Enter the ann
ual inter-
est r
ate
.
5
f
5~I/Y
5
00
Calculate the present
v
alue
.
@
v
P
V=
-376889
Ans
wer:
Y
ou should deposit $3,768.89 no
w
.
4
3 Financial FunctionsCurrent.indd 27
06.7.12 3:53:22 PM
