Chapter 14: Applications 389
Getting Started: Computing Compound Interest
Getting Started: Computing Compound InterestGetting Started: Computing Compound Interest
Getting Started: Computing Compound Interest
At what annual interest rate, compounded monthly, will 1,250 accumulate to 2,000 in 7
years?
3. Press Í to select
1:TVM Solver from the
CALC VARS menu. The TVM Solver is displayed.
Press
48 Í to store 48 months to Ú. Press † 9000
Í to store 9,000 to PV. Press Ì 250 Í to store
L250 to
PMT. (Negation indicates cash outflow.) Press 0
Í to store 0 to
FV.
Press
12 Í to store 12 payments per year to P/Y
and 12 compounding periods per year to
C/Y. Setting
P/Y to 12 will compute an annual percentage rate
(compounded monthly) for æ. Press † Í to select
PMT:END, which indicates that payments are due at the
end of each period.
4. Press } } } } } } to move the cursor to the æ
prompt. Press ƒ \ to solve for æ. What APR
should you look for?
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