The Time Value of Money (TVM) calculator is a powerful tool for loan calculations. This guide will walk you through how to use it effectively for various real-world loan scenarios.
Sarah is buying her first home and needs to calculate her monthly mortgage payments. She's borrowing $250,000 for a 30-year fixed-rate mortgage at 4.5% annual interest. How much will her monthly payments be?
| Value | Keystrokes | Display | Description |
|---|---|---|---|
| shift, C TVM | Clears the financial variables. | ||
| shift, B/E | To toggle the BEG / END mode so the BEG indicator is not displayed. | ||
| 12 | STO, P/YR | 12.00 | Sets the payments per year. This also sets the compounding periods to the same value if using the Focused Calculator. |
| 30 | shift, xP/YR | 360.00 | Sets the total number of payments to the value in x (30) times the payments per year. |
| 4.5 | I/YR | 4.50 | Stores the annual interest rate. |
| 250000 | PV | 250,000.00 | Stores the loan amount, PV. |
| PMT | -1,266.71 | Calculate the monthly payment. |
Sarah's monthly mortgage payment will be $1,266.71.
Calculates the Payment
360.00 : The number of periods.
4.50 : The annual rate.
250,000.00 : The present value.
-1,266.71 : The payment.
0.00 : The future value.
12.00 : Payments per year.
12.00 : Compounding periods per year.
0.00 : Payments due at end.
John's small business is taking out a $100,000 equipment loan for 10 years. The bank offers an annual interest rate of 6%, compounded semi-annually (2 times per year), with quarterly payments. What will John's quarterly payments be?
| Value | Keystrokes | Display | Description |
|---|---|---|---|
| shift, C TVM | Clears the financial variables. | ||
| 4 | STO, P/YR | 4.00 | Sets the payments per year. |
| 2 | STO, C/YR | 2.00 | Sets the compounding periods per year. |
| 10 | shift, xP/YR | 40.00 | Sets the total number of payments to the value in x (10) times the payments per year. |
| 6 | I/YR | 6.00 | Stores the annual interest rate. |
| 100000 | PV | 100,000.00 | Stores the loan amount, PV. |
| PMT | -3,335.95 | Calculate the quarterly payment. |
John's business will need to make quarterly payments of $3,335.95 for the equipment loan.
Calculates the Payment
40.00 : The number of periods.
6.00 : The annual rate.
100,000.00 : The present value.
-3,335.95 : The payment.
0.00 : The future value.
4.00 : Payments per year.
2.00 : Compounding periods per year.
0.00 : Payments due at end.
Lisa has a student loan of $50,000 for 20 years at 5% interest, compounded monthly with monthly payments. The calculated monthly payment is $329.98, but if she can only afford to pay $300 per month, how much will she still owe at the end of the 20-year term?
| Value | Keystrokes | Display | Description |
|---|---|---|---|
| shift, C TVM | Clears the financial variables. | ||
| 12 | STO, P/YR | 12.00 | Sets the payments per year. |
| 20 | shift, xP/YR | 240.00 | Sets the total number of payments to the value in x (20) times the payments per year. |
| 5 | I/YR | 5.00 | Stores the annual interest rate. |
| 50000 | PV | 50,000.00 | Stores the loan amount, PV. |
| -300 | PMT | -300.00 | Store the actual payment amount. |
| FV | -12,321.91 | Calculate the future value (remaining balance). |
If Lisa consistently underpays by making $300 monthly payments instead of the required $329.98, she will still owe $12,321.91 at the end of the 20-year term.
Calculates the Future Value
240.00 : The number of periods.
5.00 : The annual rate.
50,000.00 : The present value.
-300.00 : The payment.
-12,321.91 : The future value.
12.00 : Payments per year.
12.00 : Compounding periods per year.
0.00 : Payments due at end.
By mastering these techniques, you can use the TVM calculator to analyze various real-world loan scenarios quickly and accurately, helping you make informed financial decisions.