HP 10bII+ - Savings

Additional Examples148
Part 3
What if you had monthly payments as in part 1, but chose a 15-year term? What would your
new payment be? What would be the total interest paid on the contract?
Savings
Saving for College Costs
Suppose you start saving now to accommodate a future series of cash outflows. An example
of this is saving money for college. To determine how much you need to save each period,
you must know when you’ll need the money, how much you’ll need, and at what interest rate
you can invest your deposits.
Example
Your oldest daughter will attend college in 12 years and you are starting a fund for her
education. She will need 15,000 at the beginning of each year for four years. The fund earns
9% annual interest, compounded monthly, and you plan to make monthly deposits, starting
at the end of the current month. The deposits cease when she begins college. How much do
you need to deposit each month?
This problem is solved in two steps. First calculate the amount you’ll need when she starts
college. Start with an interest rate conversion because of the monthly compounding.
GS\Í
26.00 Sets payments per year for every
two weeks.
Ù
514.82 Calculates number of biweekly
payments.
v\Ú
19.80 Displays years required to pay
off the loan.
Table 13-19 Calculating the total interest paid on the contract
Keys Display Description
JG\Í
12.00 Sets payments per year.
JV\Ú
180.00 Stores new term.
Ì
-8,446.53 Calculates payment for shorter
term.
PvÙ1
-1,520,374.70 Calculates total paid.
vÏ4
-785,374.70 Displays the total interest paid
on the contract.
Table 13-18 Calculating the number of years required to pay off the loan
Keys Display Description