Answer:Your calculator should now display a screen with these variables. I have written what each
variable stands for next to the variable. You calculator likely has numbers next to some of the
variables. This is okay. We will type over them when we need to solve a specific loan problem.
N Number of payments
I% Annual interest rate
PV Loan amount (Normally
entered as a POSITIVE
number in loan problems.)
PMT Monthly payment amount
(Usually entered as a
NEGATIVE number in loan
problems.)
FV Balance when loan is paid
off. (Usually 0 in a loan
problem.)
P/Y Number of payments per
year. (Usually 12 in a loan
problem.)
C/Y How often interest is
charged. (Usually 12 in a
loan problem)
Begin / End Choose Begin if you make a
loan payment the day you
take your loan. Otherwise
choose End. We will always
leave this on END.
Example: A new car is purchased and a $25,000 loan is taken. The loan is for 6 years (72
months) and the interest rate is 4.9% compounded monthly. What is the monthly payment?
Calculator steps: Hit APPS button then select Finance then select TVM solver.
We will solve most of the problems in this chapter from this screen. We need to know what
each variable represents. We will enter values for every variable except for the one we are
solving for. We are computing a monthly payment. We will put values in for every variable,
except (PMT). PMT stands for the payment.
Enter these values on your calculator.
N (number of payments) 72
I% (annual interest rate) 4.9
PV (Loan amount, make
this amount positive.)
25000
PMT Move cursor here and hit
green alpha button then
enter after you have entered
every other value.
FV (what you owe after
make all payments)
0
P/Y (payments per year) 12
C/Y (how often interest is
paid)
12
Begin / End
(We will always leave this
on end.)
End
Once you have entered all of the amounts scroll up to PMT. Make sure your cursor is flashing
next to PMT. It doesn’t matter what value is in the PMT. Your calculator will put in the correct
payment when you tell it to compute the payment. Hit the green ALPHA button the ENTER.
Answer: $401.46
Step-by-step explanation:
