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Education & Careers

Why should finance students (and other people) use financial calculators

What are the actual benefits of a financial calculator? Not only finance students, but also accountants, business owners, financiers and some others can all benefit from a great financial calculator. Unlike a scientific calculator or even a normal calculator, a finance calculator is focused more on solving finance problems. The finance calculator will rapidly reduce complex complications for finance questions. This will increase your efficacy at carrying out this job.

Money problems and its time value

A financial calculator will allow you to enter information and details for calculating time value of money problems. Here is an example: an investor deposits one thousand dollars each year into his bank that earns four per cent interest. How much money will there be in the account in five years? A financial calculator will let you to enter all the different terms in this problem and help you calculate the outcome. This eliminates the requirement of longer time value of money formulas.

Statistics

A financial calculator also calculates some simple statistics like weighted averages, correlations and linear regressions. This also eliminates the requirement to go step by step to carry out those calculations, and will automatically carry out the calculation right after entering the data.

Finance calculations

One of the best (and obvious) benefits of financial calculators is its use in finance problems and calculations. Most financial calculators are able to calculate operations for discounted cash flows, internal rates of returns, net present value, loan formulas, as well as markup calculations.

How can I use financial calculators?

One of the main functions of financial calculators is to help with the calculation of payments, set interest rates and to resolve for the present or future value of an annuity or loan. There are several different financial calculators, but all of them have certain functions in common. There are five keys that represent the variables used most frequently on a financial calculator. These are “N”, which stands for number of periods, “I”, which stands for periodic interest rate, “PV”, which stands for present value, “PMT”, which stands for payments and also “FV” which stands for future value. Utilising a financial calculator, you can resolve for any of those 5 functions.

Determine the variable you want to solve for. Remember that the present value is often the part of the loan that you are starting with. For instance if you have a twenty year mortgage on your home, the present value will be the amount of the loan.

Keep in mind when you need to use “zero.” PMT is zero whenever you invest a lump sum or also when you owe all of your money at the end of a term, PV is zero whenever you are receiving or also making payments and FV is zero whenever a loan is finished paying out.

Enter the values into the financial calculator with your keypad. Typically, you enter the amount and press the function key that will correspond with that amount. For instance, if N should be 250, you should enter “250” and press “N” key. The system utilised to input the values can vary between different financial calculators, hence consult your own calculator’s instructions.

About author

Mary is a London-based copywriter. Her passions are the online world and music, and in her free time she enjoys reading her favourite books as well as playing chess and travelling.
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