# HP10BII Lump Sums

To begin, we consider TVM calculations with single (lump) sums. In this situation, we do not use the PMT key, so be sure to either clear all, which sets the payment (PMT) equal to 0, or enter 0 as the PMT when entering the input data. If you know any 3 variables, you can find the value of the 4th.

Example 1:

What is the FV (future value) after 3 years if the interest rate is 26%? First, clear with ‘gold shift’ C ALL. If you observe other than 1 P_Yr, change by entering 1 ‘gold shift’ P/YR. Check by ‘gold shift’ C ALL.

Next, enter the data.

3 N

26 I/YR

100 PV

To determine the FV simply press FV key and the FV of -$200.04 is displayed.

The HP is programmed so that if the PV is + then the FV is displayed as - and vice versa, because the HP assumes that one is an inflow and the other is an outflow.

Example 2:

What is the PV of $500 due in 5 years if the interest rate is 10%? Clear first and then enter the following data.

5 N

10 I/YR

500 FV

Pressing the PV key reveals that $310.46 will grow to $500 in 5 years at a 10% rate.

Example 3:

Assume a bond can be purchased today for $200. It will return $1,000 after 14 years. The bond pays no interest during its life. What rate of return would you earn if you bought the bond?

14 N

-200 PV (key in 200 and then use the +/- key to change sign)

1000 FV

Simple press the I/YR key and the HP calculates the rate of return to be 12.18%.

Remember that the HP is programmed so that if the PV is + then the FV is displayed as - and vice versa because the HP assumes that one is an inflow and the other is an outflow.

Now suppose you learn that the bond will actually cost $300. What rate of return will you earn?

Override the -200 by entering 300 =/- PV , then press I/YR to get 8.98%. If you pay more for the bond, you earn less on it. The important thing, though, is that you can do ‘what if’ analyses with the calculator.

Now do nothing except ‘gold shift’ OFF to turn off the calculator. Then turn on the calculator ON. The display shows 0.00. Is the memory erased? Not completely. What was on the screen is gone, but press RCL N to get N = 14.00. The other memory registers also retain info unless you press ‘gold shift’ C ALL.