Tutorial for Users » hp 12c (platinum) - Time Value of Money (TVM) Calculation

More about TVM

Introduction TVM on HP 12c

Many financial problems are based on the concept of charging a fee (interest) for the use of someone else’s money for a fixed period of time. The phrase time value of money describes the calculations based on such problems.

There are two main types of financial problems that HP 12c can help to solve:

  • Compound interest
  • Simple interest

With simple interest, only the principal (the original amount of money) earns interest for the entire life of the transaction. The principal, plus interest earned is repaid in one lump sum.

When simple interest is added to the principal at specified compounding intervals, and thereafter, also earns interest, the interest is compounded. Savings accounts, mortgages and leases are compound-interest calculations.

TVM Elements

There are five standard variables used to describe most compound interest (TVM) problems:


Number of payments


Periodic interest rate


Present value


Payment amount each period (periodic payment amount)


Future value

The TVM capability in the HP 12C calculator does many compound-interest problems. Specifically, the TVM functionality can be used for a series of cash flows (money paid, or money received) when:

  • The dollar amount is the same each payment
  • The payments occur at regular intervals
  • The payment period coincides with the compounding periods

Given any four of the above key elements, it is possible to solve for the fifth variable.

Cash Flow Diagrams and Signs of Numbers

It is often helpful to illustrate or visualize TVM calculations with cash-flow diagrams. Cash-flow diagrams are time lines divided into equal segments called compounding (payment) periods. Arrows show the occurrence of cash flows (payment in or out). Money received is a positive number shown as an arrow pointing up, and money paid out is a negative number shown as an arrow pointing down (Figure 1).

It is essential to use the correct sign (positive or negative) for TVM numbers. The calculations will only make sense if payments out are consistently shown as negative, and payments in (receipts) as positive. A calculation must be performed from the point of view of either the lender (investor) or the borrower, but not both. This is called the TVM sign convention.

HP 12c TVM Example

Example: A home mortgage

The maximum monthly mortgage repayment you can make is $850. You can make a $14,000 down payment. The current interest rate is 8.75%. For a mortgage of 25 years, what is the maximum purchase price that you can afford?

Figure 1: Cash Flow Diagram

Following are the hp12c keystrokes used to solve the problem in this example problem:





(the display is not changed)

Clear hp12c financial registers


(the display is not changed)

Set hp12c END mode

25 [g][12x]


Number of payments use by the hp 12c

8.75 [g][12x]


Monthly interest rate on the hp 12c

850 [CHS][PMT]


Monthly payment on the hp12c

0 [FV]


Future value = 0
(ie mortgage paid out)



Calculate amount to borrow

14000 [+]


Add down payment to get maximum purchase price.

Here is how to solve the same problem using the HP 10bii.

HP 12c TVM Tips

Following are some HP 12c tips to use when solving TVM problems, to help arrive at the correct answer:

  • Clear the HP 12c TVM variables before beginning a new calculation. This removes unwanted values from the calculator memory.
  • Set HP 12c the appropriate payment mode. (Mortgages and loans are typically END mode calculations, and leases are typically BEGIN mode calculations.
  • Be sure the correct interest rate is entered into the HP 12c.
  • The compounding period on the hp 12c must be the same as the payment period. (If not, interest rate conversion functions will need to be used to calculate the correct rate).
  • Remember the sign convention on the hp12c:
    money received = positive number, money paid out = negative number

Updated On: 12.09.20

  1. On 13-Apr-2017, Anonymous wrote: 
    Need help with this problem:
    Bob wants to save for college. He can save $2500 this year, but will increase that amount by 3% each year thereafter until his child goes to college in 10 years. If he earns 5%(yr.) on his money, how much will he have saved?
    Thank you.
    Your reply to Anonymous
    • On 17-Apr-2017, Fhub replied: 
      Well, if his payments ($2500) are made at the beginning of the year, then the final value is FV=37403.39 (at the end of year 10).
      If the payments are made at the end of each year, then FV=35622.28.
      You can calculate this with my program TVM-Calc Pro 2015 which can be downloaded from my site here: fhub.jimdo.com/
      Your reply to Fhub

  2. On 19-Aug-2015, Anonymous wrote: 
    HP12c Calculator
    Question #1:
    An individual has $1,000 to invest. He wants to accumulate $3,670. He can earn 8% annual interest on investments. How many years will it take to attain his goal? I know the answer is 16.89 years, but what are the key strokes?
    Question #2:
    Same facts as above, however the interest is compounded semiannually. The correct answer is 16.58 years. What are the key strokes?
    Your reply to Anonymous

  3. On 20-May-2015, Chucky wrote: 
    I invested $26,500 in a mutual fund. I will invest $200.00 per month for 10 years. I expect the fund to yield 15% per year. How much will I have in 10 years using an hp12c gold calculator? What are the key strokes?
    Your reply to Chucky

  4. On 21-Sep-2014, MathGuy wrote: 
    Your monthly interest rate where you enter (8.75 [g][12x]) should be (8.75 [g][12].
    Your reply to MathGuy

  5. On 21-Apr-2013, Busy Bee wrote: 
    I would like to calculate the net present value of a loan schedule or an equation of value using an hp12c gold calculator.
    e.g. "For an investor receives R1 000 after 2 years, R2 000 after 5 years and R4000 after 7 years, how much does he have to invest now at 10% p.a compound?"
    I am looking for a faster way than to manually compute:
    1000(1.1)^-2 + 2000(1.1)^-5 + 4000(1.1)^-7 = R4120.92
    Isn’t there a built-in sequence one can execute to come up with the present value at Time 0?
    Your reply to Busy Bee

  6. On 22-Jan-2013, Anonymous wrote: 
    Help with this problem:
    You have just won the lottery and will be paid $20,000 per month for the next 20 years. If you can recieve an immediate, before-tax cash payment of $2,365,000, what annual discount rate (calculate using monthly compounding) is the lottery commission using in this case?
    Your reply to Anonymous

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