Navigating Finance on Your TI-83

The TI-83 (and its variations like the TI-83 Plus) is a powerful tool for solving a range of financial problems. Its built-in finance solver simplifies calculations involving time value of money, making it indispensable for students and professionals alike.

Accessing the Finance Solver

The key to financial calculations lies in the "Finance" menu. Access it by pressing [2nd] followed by [x^-1] (which is the same as the [FINANCE] key). Select option 1:TVM Solver to open the time value of money solver.

Understanding the Variables

The TVM Solver presents a screen with several variables. Here's a breakdown:

• N: Total number of compounding periods. This is usually the number of years multiplied by the number of compounding periods per year.
• I%: Annual interest rate. Enter this as a percentage (e.g., 5 for 5%).
• PV: Present Value. This is the initial value of the investment or loan. Enter as a negative number if it represents money you are paying out (e.g., for a loan).
• PMT: Payment amount. This is the periodic payment. Enter as a negative number if you are paying it out.
• FV: Future Value. This is the value of the investment or loan at the end of the period.
• P/Y: Payments per year. This is the number of payments made in a year (e.g., 12 for monthly payments).
• C/Y: Compounding periods per year. This is the number of times the interest is compounded in a year (e.g., 12 for monthly compounding).
• PMT: BEGIN END This indicates whether payments are made at the beginning or end of the period. Use the arrow keys to highlight your selection and press [ENTER].

Solving for an Unknown

To solve for an unknown variable, enter the values for all other variables. Then, move the cursor to the variable you want to solve for and press [ALPHA] followed by [ENTER] (which is the same as the [SOLVE] key). The calculator will compute the value of the unknown variable and display it on the screen.

Example: Mortgage Calculation

Let's calculate the monthly payment for a $200,000 mortgage at 4% interest over 30 years.

• N: 30 * 12 = 360
• I%: 4
• PV: 200000
• PMT: (Leave blank, this is what we're solving for)
• FV: 0
• P/Y: 12
• C/Y: 12
• PMT: END (Assuming payments are made at the end of the month)

Move the cursor to PMT and press [ALPHA] [ENTER]. The calculator will display the monthly payment amount, which will be negative, indicating an outflow of money.

Important Considerations

• Sign Convention: Be consistent with the sign convention. Money you receive is typically positive, and money you pay out is typically negative.
• Clearing the Solver: To avoid errors, clear the values in the TVM Solver before starting a new problem. You can do this by entering 0 for each variable or pressing [CLEAR] while the cursor is on the variable.
• Decimal Places: Adjust the number of decimal places displayed on the screen using the [MODE] key.

By understanding the variables and following these steps, you can effectively use your TI-83 to solve various financial problems with ease.