The order in which the numbers are entered does not matter. Press 2nd FV (CLR TVM) to clear the memory. H�l�ˮ�0��y�Y�R��N�&KzP�#!a� V�6A�T��r^�<1c�iKA]x�����{��+��mu��Z }�����T0 �d�d��8E1K�@�}�f�/���d�T0A~�cCc�`���c?�����H9� �}����v���q_�i �SvmeK[,�%6��c#x�&@�/��欘�,�w�2]����U�^���++���p�zg,'�m�p��>L��4��SZ/j4� �����K1Y�My2�JFη�qr7�p�:,�� Posted By: Kaplan Schweser Updated: August 18, 2020. If you believe that you can earn an average annual rate of return of 8% per year, how much money would you need to invest today as a lump sum to achieve your goal? Unlike other financial calculators, the BAII Plus Professional comes from the factory set to assume annual compounding (others default to monthly compounding which is less than optimal). In this case, we have a 4-variable problem and were given 3 of them (N, I/Y, and PV) and had to solve for the 4th (FV). Of course, most people don't recognize a wrong answer when they get one, so they blithely forge ahead. One adjustment is important. � z�(#�CCD�#�1B���\�bRJty�y��:�)}S&A��.�~�n�*���&�&������ƇA���mm��6�]8*�Y�� ] �X�T�nw���~\�9�$���������Q���������Zm2�����]X�+g*��)��[�,��M�R��a4��4^����8�~�2���D��`6,a��x��*I�|'+U��=�8�l|�Ja��E�~�����U��fK���85CO6%�Uq��z�"U��R���{>=W�\$�*/���Q�A���� I. t has 10 years left to maturity and the current market rate is 6.84%. If you don't, you will quickly learn that if you enter wrong numbers you will get wrong answers. Keep that in mind because it can help you to spot incorrect answers due to a wrong input. I'll start off with a discussion on which BA II Plus calculator I prefer (and why), moving on to the recommended calculator settings for CFA exams, then jumping into details of each function I found useful, before ending with the usual FAQ section. In this problem, the $100 is the present value (PV), there are 5 periods (N), and the interest rate is 10% (I/Y). BA II Plus Tutorial 1 Payments per year: The calculator is initially set at twelve payments per year (it assumes monthly compounding). }.s�Ol��9����]\L�ʳ�'00H�z'7���m^)W O��5u\�('�7H�|�a��5����l�h`r�:��FG3��r;��Xa�� ӆ�@����"^@�3�0�2y2�00Y1>f|���e=O����/'��,#�H8X30]=�������N��9 ,KKJ In addition to the previously mentioned financial keys, the BAII Plus Professional also has the CF (cash flow) key to handle a series of uneven cash flows. Or, perhaps you are thinking of making an investment and you would like to know what rate of return you need to earn to reach a certain future value. Solving for the interest rate is quite common. Well, the compounding assumption is hidden from view and in my experience people tend to forget to set it to the correct assumption. Suppose that you are planning to send your daughter to college in 18 years. Maybe you have recently sold an investment and would like to know what your compound average annual rate of return was. Of course, most people don't recognize a wrong answer when they get one, so they blithely forge ahead. I will keep the examples rather elementary, but understanding the basics is all that is necessary to learn the calculator. Now all we need to do is enter the numbers into the appropriate keys: 5 into N, 10 into I/Y, -100 into PV. 97 0 obj <> endobj Furthermore, assume that you have determined that you will need $100,000 at that time in order to pay for tuition, room and board, party supplies, etc. 111 0 obj <>/Filter/FlateDecode/ID[<05777E79B7AEEFCA358C33A58AD95672><7647E19EC5A29D46ADB852AD68A1AB55>]/Index[97 27]/Info 96 0 R/Length 75/Prev 140355/Root 98 0 R/Size 124/Type/XRef/W[1 2 1]>>stream Assume that you can earn 9% per year on your investment. Calculate the modified duration on the bond. Well, the compounding assumption is hidden from view and in my experience people tend to forget to set it to the correct assumption. By default the BAII Plus Professional displays only two decimal places. If you know the interest rate, then we can solve for the amount of time that it will take for the present value to grow to the future value by solving for N. Suppose that you have $1,250 today and you would like to know how long it will take you double your money to $2,500. This is the classic type of problem that we can quickly approximate using the Rule of 72. When we entered the interest rate, we input 10 rather than 0.10. H�\S�n�0��s4Rc��{X�����&���M���;c���3��|�ߒ�����P�&�ݖ�MB�m �-��� zg�4���F[H��(���Œy�U\�.z -�t���P��[�=���ߒM~��6���k�j���F73�\���ts��iV&��gC�cU���p{T�� =�A�22;�c�3HA0\���U�6��3�&Xp��H!����A$E�U���QC3ʙ�/ى��ZP�646h��2Jq'e�����{������G�n���I\'�9D�cZ�! That's it, the calculator is ready to go. %PDF-1.5 %���� Solving for the present value of a lump sum is nearly identical to solving for the future value.

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