Welcome to this Time Value of Money calculations

tutorial using the BA II Plus calculator, compiled by Andrew Rossman.

In this tutorial we will only be using these ”Time Value of Money” keys.

That is, we will not be changing P/Y and C/Y values. P/Y and C/Y will be left at their

default values 1. So if you plan on changing them, please see

other videos posted on this channel. We will enter incoming payments as positive

and outgoing payments as negative. You can change the decimals to your desired

number of decimal places by pressing 2nd FORMAT. You can choose 9 to display all decimals but

I will leave it at 2. Press enter, and then 2nd quit.

Before solving any problem, Press 2nd CLR TVM to clear these TVM entries

You can always check the value stored in the TVM entries by pressing the Recall button

and then the TVM key. For example, RCL PV shows 0, and RCL PMT also shows 0 because

I cleared the TVM entries. So let’s look at the first example:

Solving for Payment. Laura takes a 15-year, $500 000 mortgage, on a new condo. At an interest

rate of 4% (that is compounded monthly), what is the monthly payment?

So we begin by pressing 2nd CLR TVM to clear previously done work.

Since we have monthly payments for 15 years, there will be 15x 12 payments which equals

180 payments in total. So we input 180 N

For the interest rate, we divide the 4% by 12 by pressing 4 divided by 12 equals 0.33

and then press I/Y. Note that there are more decimal places not

displayed by the calculator because it is set to 2 decimal places. Although the remaining

decimals are not displayed, they will still be used in the computations.

Note that it will be incorrect to just type 0.33 and press I/Y. You will be missing the

remaining decimal places not displayed by the calculator.

For Present value we enter 500,000 Present Value

Since we will have 0 balance at the end of 15 years, we enter 0 Future Value

And then CPT Payment. And that gives $3,698.44

Note that the value is negative because we input the present value as positive.

The next example shows how to solve for Present Value.

Helene is planning ahead for her daughter Paula’s college tuition. Paula begins college

in 5 years and will need $80,000. How much would Helene have to invest today at 6% compounded

annually to have $80,000 in 5 years? This is a compound interest problem where

the present value is required. We begin by clearing TVM entries by pressing

2nd CLR TVM. Since the duration is 5 years and interest

is compounded annually, we input 5 for N by pressing 5 N.

For 6% interest rate, we press 6 I/Y Since there are no recurring payments we input

0 PMT. For the future value, we enter 80,000 FV.

And then compute PV Which gives 59,780.65. Next let’s solve for future value.

Josh has an investment account with $50,000. If Josh earns 6% per year and contributes

$400 each month, how much will his investments be worth in 10 years?

Note here that interest is compounded per year. Therefore, interest will not be applied

to the $400 monthly payments until after 1 year. That is, until the payments add up to

12 x 400 which is $4800. In essence, we actually have 10 conversion

periods over the 10 years. So we input 10 N

For interest rate we input 6 I/Y We input 50,000 PV

And 4800 PMT. We then compute future value which gives 152,810.20

Next we solve for time. Example 4 – Solving for Time

Steven has $25,000 in credit card debt. His credit card charges 2% in monthly interest

and Steven pays $1,000 each month toward the balance. If Steven doesn’t make any further

purchases, how many months will it take to fully repay his debt.

At 2% monthly interest rate, let’s input 2 I/Y.

25,000 PV for the debt amount Since the payment is made to reduce the debt,

we input it as a negative value: 1,000 negative, and then PMT

Since the debt will be fully repaid, we input 0 for the future value: 0 FV.

And then compute N which gives 35 months. Next we solve for interest rate Martin’s savings account has $25,000 today.

In 5 years, the account is worth $32,000. What is the annual interest rate?

Since interest is compounded annually for 5 years, we input 5 N.

We’ll have to input the 25000 present value as negative because it is an outflow. So we

enter 25 000, negative, PV. We enter 0 PMT as there are no periodic payments.

For future value we enter 3200 FV And then compute interest rate I/Y which gives

5.06%. And that concludes this tutorial.

Thanks for watching.

## 74 Comments

I don't understand why sometimes you change the p/y and the c/y yet other times you just divide the interest rates. Can you briefly explain how you dissect the problem in order to determine whether you want to change that or just divide the i/y interest rate by 12? It's very confusing, but I can usually get the same answer using each method.

Umm for FV I didn't get that on my calculator it came up as 156,606.2695

:/ everything else before that seemed to be the same on my calculator

Thank you so much, a perfect video! Cheers ๐

When I do this on my BAII Plus Pro I get -3,676.2934. What am I doing wrong?

Your's is the best, no doubt Joshua – keep it up!

Thank you!!!

that is help full. Ty

On the last question, why would the savings account value of $25,000 be an outflow and therefor negative?

At 5:15, you convert PMT to be in terms of years. What if instead I convert I/Y and N to be in terms of months. So PMT=400 I/Y=6/12=0.5 and N=10×12=120. Plugging these into calculator (with PV same as before) you get -156k. So there's a small discrepancy. Would anyone know why?

What program did you use to make your videos?

Thank you so much for your tutorial. It was very helpful.

double checking the mortgage payment is $2,848.19 using a BA II plus

nice pleasant voice to listen to

Thank you so much! I was in the twilight zone about this subject while in class 3 hrs ago! Thanks again.

how do u input cash flows?

hello please what is your email address ?

Thank you very much.

Can i find , by using BA II plus , the balance after 4th payment if the payment is increasing by r% or by โnumberโ ???

In Example #1, I have checked my calculations 3 times and continue to receive the same answer $2,992.38 which is different to the answer you received. Please clarify the calculations. Thanks.

thank you Joshua!

Super helpful. Thanks Joshua!!

Hi Mr Emmanuel, In example 4, I typed in each item same as the example, I keep on getting 20.4753; I do not understand which went wrong? Could you please explain? Thank you

Oh, I have found out why, I did not enter '-' in 1000 PMT, that caused the issue. How do I correctly determine every questions' positive and negative quickly? Thank you for this helpful tutorial.

Very Helpful! Thank you!!!!!

Great video, as always. Thanks

You're videos are almost perfectly! Thank you!

$2,848.19 WTFยฟยฟยฟยฟยฟ HELP!!!!!!!!!!! SOS PLEASEEEE

hey josh if the answers are in negative do we display it as negative as final answer? coz am taking this module exam soon

I really like your voice, clear and concise verbiage and the video itself helped me revisit how valuable the TVM functions are on my BA II.

I followed the example…but for the first example i am getting $3217.16 and not $3698.44 as you stated. What am i doing wrong?

Helpful

Thank you so much for this video!

5:16 I thought PMT is negative since it's an outflow. So I thought PMT = -4800 don't understand why it is positive in the example? Thank you in advance

Hi Emmanuel can you explain why you put 2 as I/Y at 6:10 ? Why didn't you do 24% instead because its monthly interest right? I'm confused, thanks!!!

Thanks!

Thank you very much! Your teaching is so clear and understandable.

Hi, thanks for your tutorial. Where can I find that emulator?? I really appreciate your help

Best tutorial I found for BA II calculator! So helpful. Thank you!!

sho me da wey?

tttthhaannkkyoouu soo muuch MAN!!

Thank you so much …

Thank you soooo much! i had no idea what to do

du bis dummamaskfNSDFK

Very helpful. Easy to follow.

You're videos are almost perfectly

Thank you. was driving myself nuts trying to get it to match. forgot to divid interest rate by 12 and multiply N by 12.

Thank you so much sir!

I love you.

Thank you Josh

thank you!

Perfect video! nothing extra and everything you need to know. Very helpful that you solved every type of problem!

Thank you so much

Really helped. thanks fella!

Excellent video

hello i have followed all step by im not getting the right number its so weird

Mr. Emmanuel, what could be wrong with my CPT button if it is not computing?

simple, concise and to the point. Thank you, sir!

Thank you so much for uploading this video! I was having a difficult time trying to use this for my finance class!

Thank You so much!!

Dude thank you. Just taught me better than my snooty professor could.

Thank you Joshua

Great video, clear instructions. Thanks a lot!!

Great video, but there is an error in example 3. Since payments are made monthly while interest is compounded annually (i.e. payments are more frequent than interest), the annuity is nominal. This problem cannot be solved using the calculator if P/Y isn't changed.

Oye…I am computing for eg 1 with my ba2 calculator and getting -2848.19. Pls advise

Amazingly clear and concise examples! If only all the youtube video tutorials were this great. Thanks a ton! By the way, your voice and accent are awesome and make this video even better!

learn easier and faster here than I do paying for my college degree

Well, you certainly made this a lot easier than Texas Instruments' own tutorial shit…

Why I always can't get the correct answer, I followed the instruction step by step. For the first example, i got -2848.1866

Very helpful. Thanks

Thank you so very much! this is the best YouTube video to understand FV and financial calculator

thank you for the simple, straight-forward instruction!

Thanks.

Excellent video, thanks a lot. Very clear!

thx for saving mi b4 my exam