1. How a Financial Calculator Can Help Teens Make Deci$ion$ about Saving & Investing 2002

2. Marsha A. Goetting Ph.D., CFP ®, CFCS Professor & Extension Family Economics Specialist Department of Agricultural Economics & Economics Department of Agricultural Economics & Economics

3. Have you wondered? How much you would have if you saved $5 a month for 18 years?How much you would have if you saved $5 a month for 18 years?

4. Have you wondered? How much you would have if you saved $100 a month during your working years?How much you would have if you saved $100 a month during your working years?

5. Workshop You are going to learn how to solve these & similar problems quickly & easily by using a financial calculatorYou are going to learn how to solve these & similar problems quickly & easily by using a financial calculator

6. Financial Calculator Texas Instruments BA-35 Solar Business AnalystTexas Instruments BA-35 Solar Business Analyst Discontinued Discontinued

7. Introduction Getting Acquainted with your Financial CalculatorGetting Acquainted with your Financial Calculator

8. Turn on MODE CE/C 2ndCPT AC/ON N X 12 % i PMTPV FV 12  12 Fix Fix

9. Financial Mode Fin 0. If FIN is not lower left cornerIf FIN is not lower left corner PressPress MODE AC/ONCPT

10. Decimal Function FIN 0.00 PressPress 2nd 2nd Fix CPT2

11. Clearing Screen/Display Press key once Press key once n Clears Display n Corrects Incorrect Entries n Clears word “Error” CE/C

12. Clearing Financial Registers Press keyPress key n Clears numbers in registers & display N%iPVPMTFV CE/C2nd CMR

13. Finance Keys N % i PMT Number of Periods Number of Periods Interest Rate Interest Rate Payment Amount Payment Amount

14. Finance Keys PV FV Present Value Present Value Future Value Future Value Compute key Compute key CPT

15. Lump Sum Savings

16. Present Value PV Value of $100 that was put into savings when you were born

17. What is future value? How much will you have at age 18? How much will you have at age 18?

18. Future Value $100 Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PV 100 PVEnter PV 100 PV Enter # Periods 18 NEnter # Periods 18 N Enter % Rate 9 % iEnter % Rate 9 % i CPT FV 471.71CPT FV 471.71

19. Baby gifts Your parents deposited $500 when you were bornYour parents deposited $500 when you were born What will you have in savings at 18?What will you have in savings at 18?

20. Future Value $500 Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PV 500 PVEnter PV 500 PV Enter # Periods 18 NEnter # Periods 18 N Enter % Rate 6 % iEnter % Rate 6 % i CPT FV 1,427.17CPT FV 1,427.17

21. Lottery Winnings $50,000 $50,000 How much would you have in 40 years? How much would you have in 40 years?

22. Future Value $50,000 Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PV 50,000 PVEnter PV 50,000 PV Enter # Periods 40 NEnter # Periods 40 N Enter % Rate 5 % iEnter % Rate 5 % i CPT FV 351,999.43 waitCPT FV 351,999.43 wait

23. What if ????? You want to know what the amount will grow to in 15 years instead of 40 years….just change theYou want to know what the amount will grow to in 15 years instead of 40 years….just change the N

24. Future Value $50,000 Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PV 50,000 PVEnter PV 50,000 PV Enter # Periods 15 NEnter # Periods 15 N Enter % Rate 5 % iEnter % Rate 5 % i CPT FV 103,946.41CPT FV 103,946.41

25. The Difference 40 years = $351,999.4340 years = $351,999.43 15 years = $103,946.4115 years = $103,946.41 $248,053.02

26. Central Idea The longer your savings earn interest the more money you will haveThe longer your savings earn interest the more money you will have

27. Summary: Lump Sum Savings

28. Solving for Future Value of Annual Regular Deposits

29. CDs, Savings Accounts

30. Payments (Deposits) +/- Enter deposit amount as a negative valueEnter deposit amount as a negative value 2,0002,000 Screen: -2,000.00Screen: -2,000.00 PMT

31. Happy Birthday Grandpa gives you a $100 Certificate of Deposit each year for 20 years Grandpa gives you a $100 Certificate of Deposit each year for 20 years

32. Birthday CD Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PMT 100 +/- PMTEnter PMT 100 +/- PMT Enter # Periods 20 NEnter # Periods 20 N Enter % Rate 5 % iEnter % Rate 5 % i CPT FV 3,306.60CPT FV 3,306.60

33. Married Couple Saves $2,000 each per year for 25 yearsSaves $2,000 each per year for 25 years How much will they have?How much will they have?

34. Married Couple Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PMT 4,000 +/- PMTEnter PMT 4,000 +/- PMT Enter # Periods 25 NEnter # Periods 25 N Enter % Rate 11 %iEnter % Rate 11 %i CPT FV 457,653.22 holdCPT FV 457,653.22 hold

35. What if ????? Interest rate is only 4% instead of 11%….just change the amount inInterest rate is only 4% instead of 11%….just change the amount in % i

36. Married couple 4% Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PMT 4,000 +/- PMTEnter PMT 4,000 +/- PMT Enter # Periods 25 NEnter # Periods 25 N Enter % Rate 4 % iEnter % Rate 4 % i CPT FV 166,583.63CPT FV 166,583.63

37. The difference 11% = $457,653.2311% = $457,653.23 4% = $166,583.63 4% = $166,583.63 $291,069.60

38. Central Idea Higher interest rates result in more earnings, but risk is always a factorHigher interest rates result in more earnings, but risk is always a factor

39. Savings 40 years John saves $2,000 each per year from age 25 to 65John saves $2,000 each per year from age 25 to 65 How much will he have?How much will he have?

40. Savings 40 yrs Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PMT 2,000 +/- PMTEnter PMT 2,000 +/- PMT Enter # Periods 40 NEnter # Periods 40 N Enter % Rate 5 % iEnter % Rate 5 % i CPT FV 241,599.55CPT FV 241,599.55

41. Summary: Solving for Future Value of Annual Regular Deposits

42. Already have savings How much will you have in the future if you add annually to your savings?How much will you have in the future if you add annually to your savings?

43. Beginning Balance, Add Annually $$$$$$$$

44. Beginning Balance = $1,000 Annual Deposits = $200 Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PV (Beg. Bal.) 1,000 PVEnter PV (Beg. Bal.) 1,000 PV Enter PMT 200 +/- PMTEnter PMT 200 +/- PMT Enter % Rate 6 % iEnter % Rate 6 % i Enter # Periods 7 NEnter # Periods 7 N CPT FV 3,182.40 CPT FV 3,182.40

45. Beginning Balance $10,000 Annual Deposits $2,000 Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PV (Beg. Bal.) 10,000 PVEnter PV (Beg. Bal.) 10,000 PV Enter PMT 2,000 +/- PMTEnter PMT 2,000 +/- PMT Enter % Rate 5 % iEnter % Rate 5 % i Enter # Periods 7 NEnter # Periods 7 N CPT FV 30,355.02CPT FV 30,355.02

46. Education Fund = $1,000 Add annually $1,500 Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PV (Beg. Bal.) 1,000 PVEnter PV (Beg. Bal.) 1,000 PV Enter PMT 1,500 +/- PMTEnter PMT 1,500 +/- PMT Enter % Rate 8.5 % iEnter % Rate 8.5 % i Enter # Periods 18 NEnter # Periods 18 N CPT FV 63,326.95 CPT FV 63,326.95

47. Summary: Beginning Balance, Add Annually

48. Monthly

49. Savings deposits Credit card payments Car payments House payments

50. Convert 2 items Interest Rate # of Periods % i N

51. Annual Interest Rate 18.5 % Annual Percentage Rate18.5 % Annual Percentage Rate Convert to monthlyConvert to monthly

52. Monthly Interest Rate Divide interest rate by 12Divide interest rate by 12 18.5  12 = 1.54 18.5  12 = 1.54 Then press Then press %i

53. # of Periods- Monthly Multiply number of years by 12Multiply number of years by 12 6 years x 12 = 72 6 years x 12 = 72 Then press Then press N

54. Grandparents Save $5 month for 18 years

55. $5 per month Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PMT 5 +/- PMTEnter PMT 5 +/- PMT # Periods 18 x 12 = 216 N# Periods 18 x 12 = 216 N % Rate 5.5  12 = 0.46 %i% Rate 5.5  12 = 0.46 %i CPT FV 1,838.35CPT FV 1,838.35

56. Aunts & Uncles $60

57. $60 per month Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PMT 60 +/- PMTEnter PMT 60 +/- PMT # Periods 18 x 12 = 216 N# Periods 18 x 12 = 216 N % Rate 6.5  12 = 0.46 %i% Rate 6.5  12 = 0.46 %i CPT FV 24,500.33CPT FV 24,500.33

58. You Save Save $100 month for 30 years

59. Monthly Savings $100 Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PMT 100 +/- PMTEnter PMT 100 +/- PMT # Periods 30 x 12 = 360 N# Periods 30 x 12 = 360 N % Rate 5.5 12 = 0.46 %i% Rate 5.5  12 = 0.46 %i CPT FV 91,361.19CPT FV 91,361.19

60. Save for down payment

61. Monthly Savings Clear registers 2nd CE/C CE/CClear registers 2nd CE/C CE/C Enter PMT 600 +/- PMTEnter PMT 600 +/- PMT # Periods 5 x 12 = 60 N# Periods 5 x 12 = 60 N % Rate 9.5 12 = 0.79 %i% Rate 9.5  12 = 0.79 %i CPT FV 45,853.35CPT FV 45,853.35

62. How a Financial Calculator Can Help Teens Make Deci$ion$ about Saving & Investing 2002