This is the second page of a tutorial that begins
here.
Using the financial function keys
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To enter a value into any of the five financial registers, just enter the
number into the view window and then press the key that corresponds to the
financial register that you wish to load.
As an an example, let's just set the number of periods for a financial
calculation. A period can be a year, or a month, or a day. It depends on
the problem. Suppose that we're going to solve a problem that involves a
period of five years, including annual payments and interest that is
compounded annually.
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On the calculator keyboard, use your stylus (or fingernail) to tap
When you tapped the '5' key, a '5' appeared in the view window. Then, when
you tapped the 'N' key, the '5' disappeared. Where did it go? It went into
the "Number of periods" register.
The number of periods must always be a whole number. But, what if you
need to solve a problem that involves a time period of a year and a half?
Well, you have to think of that as three semi-annual periods or eighteen
months. The number of periods must be a whole number and it's always
positive (i.e. greater than zero).
The Cash Flow Registers
The three keys on the right end of the row of financial function keys are
used to control a special subset of the financial registers, called the cash
flow registers. The cash flow registers are:
| PV | Present Value |
| PMT | periodic PayMenT, and |
| FV | Future Value |
The number inserted into these registers corresponds to an amount of
money. For me, that's a number of dollars. For you, it might be euros,
or yen; pesos or rubles. The calculator doesn't care what the units are,
as long as its money.
Signed Cash Flows
What does matter about the amount is the sign (whether it's positive or
negative). All financial calculators employ the concept of signed
cash flows. The sign (positive or negative) of a value distinquishes cash
disbursements from cash receipts.
Negative amounts are used to indicate money that flows away from you. These
are cash outflows or disbursements. Whenever you pay for something with
cash (or an equivalent), you have a negative cash flow. Whenever you make
a payment on a loan, that is a negative cash flow.
When you receive money, that's a positive cash flow. Positive cash flows
occur when you sell something for cash, or borrow money.
Determining the sign of the cash flows is the most common mistake in solving
financial problems. It takes a little practice for most people to understand
this, but we're going to get plenty of practice very soon. The thing to
remember is that positive cash flows are indicated by positive values; a
negative value indicates a negative cash flow.
On the next page of this tutorial, we'll learn
how to prepare the calculator to perform financial
calculations.
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