![]() ![]() ![]() It is recommended for this class to set your calculator to the maximum decimal display. The HP10BII+ can show up to 9 decimals and the TI-BAII+ can show up to 8. If you want to go beyond two decimal places (which you will at times), you must change the display to show more decimal places. Changing Decimal Placesīoth of the financial calculators are initially set to round to two decimal places. Just highlight the option you want (END unless the problem specifically states that payments come at the beginning of each period). The very last line on the screen is “PMT: END BEGIN”. Like the Periods per year, this is part of the onscreen 5-key application. If the calculator is in BEGIN mode, you should see BGN in the upper right hand corner of your screen. The 2nd SET command will toggle back and forth between BEG and END. To change from the current setting shown on your screen, press 2nd SET. At this point, either END or BEG will show on your screen. TI-BAII+īy pressing 2nd BGN you activate the BEG/END toggle on your calculator. If the calculator is in BEGIN mode, you will see the word BEG on the bottom center of your screen. HP10BII+īy pressing SHIFT BEG/END you toggle your calculator back and forth between BEGIN and END. As with the payments per year, once you set your calculator to either BEGIN or END, it will stay that way until you set it back. For an ordinary annuity, you must set your calculator to END and for an annuity due, you must set your calculator to BEGIN. ![]() Some types of annuities (annuity due) assume that all payments come at the start of each period. If you are dealing with non-annual periods, just set P/Y to the appropriate periods per year (12 for monthly, 52 for weekly, etc.) and the C/Y will automatically adjust.Īn ordinary annuity (the most common type) assumes all payments come at the end of the each period.If you are dealing with annual cash flows, just set P/Y=1 and C/Y=1 before solving.These stand for periods per year and compounding periods per year - in this class, these will always be equal to one another. Near the bottom of the screen, you will see a P/Y= and a C/Y=. You can set your periods per year in the on-screen 5-key application.To set your periods per year to 12 - 2nd P/Y 12 ENTER.To set your periods per year to 1 - 2nd P/Y 1 ENTER.You can also do this for weekly (52), daily (365), or any other compounding pattern.To set your periods per year to 12 - 12 SHIFT P/YR.To set your periods per year to 1 - 1 SHIFT P/YR (Note - The shift refers to the yellowish/orange shift key).It is a good idea to always reset it to annual periods after doing a non-annual problem. Note that when you make a change in periods per year it will stay that way until you change it back. The following steps will walk you through changing your periods per year. As different problems will have different payment schemes, you need to be able to change the periods per year on your calculator. However, many things we do are designed to be done on an annual basis (1 period per year). If you are buying your calculator new, it is likely set to 12 periods per year (monthly). ![]() If you have a different financial calculator, refer to the manual. While there are many different types of financial calculators and each is set up differently, this page will focus on three specific calculators - the HP10BII+, the TI-BAII+, and the TI-83 or TI-84. The main body of the Chapter Three notes walks through how to solve different problems on your financial calculator, but this page is focused exclusively on how to set up your calculator to deal with things like non-annual compounding periods, annuity dues (annuities with payments coming at the beginning of the period), and changing the decimal display. However, if you don’t know how to set-up your calculator or how to use it, it becomes almost worthless. Also, by being more convenient, we are less likely to make mistakes. The advantage of calculators is that they are much more convenient than using tables or direct formulas. Fang Lin and Jennifer Pursley Introductionįinancial calculators are tools that help us solve time value of money calculations. In this example, the WACC would be calculated as follows: V = E + D is the total market value of the company's financing (equity and debt),Į/V is the percentage of equity financing,Įxample: Suppose we have the following information about a firm: WACC is the weighted average cost of capital,Į is the market value of the company's equity,ĭ is the market value of the company's debt, WACC = (E / V) × R e + (D / V) × R d × (1 − T c) The calculator uses the following basic formula to calculate the weighted average cost of capital: ![]()
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