Operation Manual

Chapter 14: Applications 256
You have found a car you would like to buy. You can afford payments of 250 per month for four years.
The car costs 9,000. Your bank offers an interest rate of 5%. What will your payments be? Can you
afford it?
Getting Started: Computing Compound Interest
At what annual interest rate, compounded monthly, will 1,250 accumulate to 2,000 in 7 years?
1. Press z † ~ ~ ~ Í to set the fixed-decimal mode
setting to
2.
2. Press Œ Í to select
1:Finance from the
APPLICATIONS menu.
3. Press Í to select 1:TVM Solver from the CALC VARS
menu. The TVM Solver is displayed.
4. Enter the data:
N (number of payments)= 48
I% (interest rate)=5
PV (present value)=9000
PMT (amount of each payment)=0
FV (future value)=0
P/Y (payments per year)=12
C/Y (compounding periods per year)=12
5. Select
PMT:END, which indicates that payments are due at
the end of each period.
6. Move the cursor to PMT and press ƒ \. Can you
afford the payment?