Page 3 - FINAL CFA I SLIDES JUNE 2019 DAY 2

Session Unit 2: 6. The Time Value of Money
Using a Financial Calculator

2 Types of Calculators allowed—
• TI BAII Plus®(including the BAII Plus Professional); and
• the HP 12C® (including the HP 12C Platinum).

• New one is preloaded with Per Year function (P/Y) = 12 (months) e.g. loans!
• Your Interest rate per Year (I/Y) is in monthly rates; most TVM/INV is in years!

Set P/Y to “1”: [2nd] [P/Y] “1” [ENTER] [2nd] [QUIT]

To check, press:
• [2nd] [P/Y] : Displays P/Y = 1.0.
• [2nd] [QUIT] : Gets you out of “programming” mode!

With P/Y set to = 1,
• I/Y becomes interest rate per compounding period, and
• N = number of compounding periods under analysis

Master these keys for virtually all TVM problems (key number 1 ).
st
N = Number of compounding periods = 5
I/Y = Interest rate per compounding period = ? (always 1 unknown)
PV = Present value = -R1000 (remember sign, esp. for I/Y)
FV = Future value = 0
PMT = Annuity payments, or constant periodic cash flow = R300
CPT = Compute = I/Y! = 15.24%