Navigating Finance on Your TI-83

The TI-83 calculator, though a bit dated, still packs a punch when it comes to basic financial calculations. Its built-in finance application provides tools for solving common problems related to time value of money, making it a handy asset for students and professionals alike.

Accessing the Finance App

First, access the Finance app. Press the APPS button. A menu will appear; scroll down until you see “Finance…” and press ENTER. You’ll then be presented with a submenu; select “TVM Solver” (Time Value of Money Solver) and press ENTER again. This is where the magic happens.

Understanding the TVM Solver

The TVM Solver displays several variables that represent key components of financial calculations:

N: Total number of compounding periods (e.g., for a 30-year mortgage with monthly payments, N = 30 * 12 = 360).
I%: Annual interest rate (expressed as a percentage).
PV: Present value (the initial amount of the loan or investment).
PMT: Payment amount per period. Remember to enter payments as negative values if you’re paying out money (e.g., loan payments).
FV: Future value (the value of the investment or loan at the end of the period).
P/Y: Number of payments per year.
C/Y: Number of compounding periods per year. These are often the same, especially for loans.
PMT: BEGIN/END: This setting determines whether payments are made at the beginning or end of the period. The default is END, which is common for most loans. Change it by highlighting either BEGIN or END and pressing ENTER.

Solving for Unknowns

To solve for an unknown variable, enter values for all the other variables. Then, move the cursor to the variable you want to solve for and press ALPHA followed by ENTER (this activates the “SOLVE” function). The calculator will then display the calculated value for the selected variable.

Example: Mortgage Calculation

Let’s say you want to determine the monthly payment on a $200,000 mortgage with a 4% annual interest rate and a 30-year term.

Set N to 360 (30 years * 12 months/year).
Set I% to 4.
Set PV to 200000.
Leave PMT blank (this is what we’re solving for).
Set FV to 0 (you want to pay off the loan completely).
Set P/Y to 12.
Set C/Y to 12.
Ensure PMT is set to END.
Move the cursor to PMT and press ALPHA followed by ENTER. The calculator will display the monthly payment amount (approximately -954.83). The negative sign indicates that this is an outflow of money.

Tips and Considerations

Double-check your inputs! A small error can lead to a significant difference in the result.
Pay attention to the sign convention. Present value (PV) and future value (FV) usually have opposite signs if they represent inflows and outflows.
The TI-83 finance app provides only basic time value of money calculations. For more complex scenarios, you may need specialized financial software.

By understanding how to use the finance app on your TI-83, you can perform a range of valuable calculations to help with financial planning and decision-making.