314 cheat sheet

314 cheat sheet - F V: i nvest today for $ tomorrow...

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FV: invest today for $ tomorrow (interest) – If you invest $9.52 for 14 periods @ 9%, at the end of the 14 th period you will have - $9.52*(1.09)^14 = $31.81; or 14 (N), 9 (i/y),-1 (PV), 0 (PMT), CPT – FV = $31.81. FVA: series of equal pmts rec’d at end of each period – If you put away $9.52 @ end of each next 14 periods @ 9% you will have - $9.52 * [(1.09)^14 + (1.09)^13 + … + (1.09)^2 + (1.09) + 1] = $247.70; or 14 (N), 9 (i/y), 0 (PV), 9.52 (PMT), CPT – FV = 247.70. PV: how much needed to invest today to have $ tomorrow – If you want to have $9.52 @ end of 14 periods, at 9% you must put away - $9.52 * [1/(1.09)^14] = $2.84; or 14 (N), 9(i/y), 0 (PMT), 9.52 (FV), CPT – PV = 2.84. PVA: in order to with draw $9.52 @ end of each of the next 14 periods @ 9% I must put away - $9.52 * [1/(1.09) + 1/(1.09)^2 + … + 1/(1.09)^14] = $74.12; or 14 (N), 9 (i/y), 9.52 (PMT), 0 (FV), CPT – PV = 74.12. PVAD/FVAD: annuity due is a series of equal pmts rec’d at the start of each period (where as an annuity is a series of equal pmts rec’d at the end of each period). PVAD = (1 + I) * PVA and FVAD = (1 + I) * FVA. ***CHANGE CALC SETTING TO ANNUITY DUE: “2 nd ” “BGN” “2 nd ” “SET” - to undo, repeat same steps. Calc is in annuity due mode when small BGN is in screen*** If I want to withdraw $9.52 at the start of each of the next 14 periods at 9% - $9.52 * [1/(1.09) + 1/(1.09)^2 + … + 1/ (1.09)^14] * (1.09) = $80.80; or 14 (N), 9 (i/y), 9.52 (PMT), 0 (FV), CPT – PV = 80.80. You put away $1000 for your grandson on the day he is born, at 10% - How much will he have when he turns 21? 21 (N), 10 (i/y), 1000 (PV), 0 (PMT), CPT – FV = $7400.25. After reflection, you think maybe putting away $150 each birthday might be better – How much would he have when he turns 21? 21 (N), 10 (i/y), 0 (PV), 150 (PMT), CPT – FV = $9600.37. Suppose you put the $150 away at the start of each year? “BGN Mode” – 21 (N), 10 (i/y), 0 (PV), 150 (PMT), CPT – FV = $10,560.41. Your daughter will be a freshman a year from now, each year of school will cost $20,000, payable at the start of each year – at 10%, how much must you invest today to cover her tuition, assuming she finishes in 4 years? 4 (N), 10 (i/y), 20000 (PMT), 0 (FV), CPT – PV = $63,397.31. If you don’t put the money away until she starts, how much is needed? “BGN Mode” – 4 (N), 10 (i/y), 20000 (PMT), 0 (FV), CPT – PV = $69,737.04. Suppose that you had the foresight to put away enough for your daughter’s education when she was born – assuming that she will enter college at age 17, how much should you have put away at 10%? From the last problem, you need $69,737.04 when she starts (age 17) – so you need the PV of that amount 17 years earlier – (PV of PVAD) – 17 (N), 10 (i/y), 0 (PMT), 69737.04 (FV), CPT – PV = $13,797.10. It is your 25 th birthday, you would like to retire at age 60 on $30,000 /yr – you think that you will live until age 85 – how much must you put
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314 cheat sheet - F V: i nvest today for $ tomorrow...

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