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HP HP-18C User Manual

HP HP-18C
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4
Time
Value
of
Money
Introduction
The
phrase
time value of money describes calculations
based
on
money
earning
interest
over
a
period
of time.
There
are two types
of
interest:
•
In
simple interest calculations,
the
amount
of
interest is a
percent
of
the
principal
and
is
repaid
in a
lump
sum. For example,
if
you
lend
a friend $500.00 for a
year
and
you
want
to
be
repaid
with
6%
simple interest
per
year,
your
friend owes you $500 +
WlOO
x
$500) = $530. Simple interest calculations
can
be
done
using
the
calculator line
and
the
00 key. Refer to
page
36 .
• Compound interest calculations take
into
account
that
interest,
added
to
the
principal
at
specified compounding
periods,
also
earns
interest.
Many
time value
of
money
problems-for
example, savings ac-
counts, mortgages,
pension
funds,
leases,
and
annuities-are
compound
interest calculations.
Amortization
calculations
deter-
mine
the
amounts
applied
toward
principal
and
interest
in
a
payment
or
series
of
payments.
4:
Time
Value
of
Money
55

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HP HP-18C Specifications

General IconGeneral
BrandHP
ModelHP-18C
CategoryPDA
LanguageEnglish

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