Over the years, I have received many questions about financial calculators. I will compile a list of the most frequently asked questions here.
Q: How can I extract values from the TVM Solver so that I can use them in formulas?
A: Excellent question. When you press the APPS button and then go into the Finance menu, you will be greeted with a list of 16 items (TVM Solver, tvm_Pmt, tvm_I%, and so on). All of the items that begin with tvm_ can be used as either functions or variables. To recall values from the TVM Solver, simply choose the item from the list and it will be displayed on the screen. For example, if you want to multiply the PV by 3, press APPS 1 4 to get tvm_PV on the screen and then type × 3 ENTER. To see descriptions of all of the items, go to the Finance Menu page.
Q: How do I save a number to memory on the TI 84 Plus so that I can recall it later for other calculations?
Unfortunately, this is a bit cumbersome on the TI 84 Plus. Notice that there is a STO⮞ key just above the ON key. Numbers can be stored in the letter keys (A, B, C, etc. are the green-colored functions of other keys) using this key. Accessing these letter keys requires that you press ALPHA and then another key, so storing a number requires pressing three keys in sequence. For example, say that you want to store the value 100 in the A memory location. Assuming that 100 is already on the screen, you would press STO⮞ ALPHA MATH.
To recall a value from memory, first notice that RCL is the second (blue) function of the STO⮞ key. So, If you want to recall that value of 100 from the A memory location, you would press 2nd STO⮞ ALPHA MATH.
It isn’t too bad, but it does take some getting used to. Do it a few times and it will almost become second nature.
Q: When using the NPV and IRR functions, can you explain the optional {cash flow counts} part?
A: Sure. That feature is there to save some data entry in certain circ*mstances, and it serves an identical purpose to the frequency prompt in many other financial calculators. If some of your cash flows repeat, then you can include the “cash flow counts” array. Let me give you an example:
What is the present value of the following series of cash flows if the discount rate is 8% per year? 100, 200, 200, 200, 300.
Normally, you might solve this problem using the NPV function as follows:
NPV(8, 0, {100, 200, 200, 200, 300})
but notice that you had to type “200” three times in a row. Using the “cash flow counts” array we can do it like this:
NPV(8, 0, {100, 200, 300}, {1, 3, 1})
Either way, you will find that the present value is \$774.01. However, the second method saves a little bit of typing and is less likely to lead to data entry errors. It doesn’t really save much time in this simple example, but in other problems it can. Be aware that if you use the “cash flow counts” array, you must enter a frequency for each of the cash flows — even those that don’t repeat must have a 1 entered.
Q: The TI-84 Plus manual tells me to use lists in the NPV and IRR functions. Why don’t you use them?
A: I’m a rebel! Seriously, I just think that it is quicker and easier to create on-the-fly arrays rather than use lists. For most of what I do, I’m not going to reuse a list more than once or twice anyway. When I do want to reuse it, I can usually use the editing functions to quickly get it done.
Q: Why am I getting an error when I use the NPV and/or IRR function?
A: Well, that depends. Most often, the errors that I see in class are caused by somebody not being careful about separating each variable in the function by commas. Every comma that you see (above) is absolutely required. Another frequent cause of errors is neglecting to make the initial outlay a negative number. You have to obey the cash flow sign convention whether you are using the TVM Solver or the functions.
Q: How do I calculate the number of days between two dates using the TI 84 Plus?
A: The TI 84 Plus supports two date formats, MM.DDYY or DDMM.YY. You calculate the difference between two days by using the dbd (days between dates) function from the Finance menu. You can access this function by pressing APPS 1 ALPHA X-1. For example, to find the number of days between 25 July 2007 and 31 December 2007 you would type:
dbd(08.2507,12.3107) if you are using MM.DDYY
or
dbd(2508.07,3112.07) if you are using DDMM.YY
Either way, you will find that there are 128 days between those two dates.
Note that the TI 84 Plus does not allow you to specify a day count basis (e.g., 30/360 or actual/360). The basis is always actual/actual.
Q: How do I find roots other than square roots using the TI-84 Plus?
A: In finance it seems that we are forever calculating various roots (cube root, fourth root, 365th root, etc). Fortunately, this is pretty simple to do if you can remember a simple mathematical rule:
$$\sqrt[N]{X} = {X^{\frac{1}{N}}}$$
So, to calculate the 5th root of 100, we simply raise 100 to the 1/5th power. To do this on the TI-84 Plus type: 100 ^ ( 1 ÷ 5 ) ENTER. In this example, the 5th root of 100 equals 2.51189. Note that the parentheses are important, otherwise you would raise 100 to the 1st power and then divide by 5 and you would get 20 as the answer. Using this technique you can calculate any root.
Q: My calculator only has a key to calculate natural logarithms. How do I calculate logarithms to other bases (say, base 10)?
A: Most often, in finance, we use natural logarithms (base e), usually abbreviated as $Ln\left( X \right)$. However, sometimes we need to use other bases. Converting from base e to any other base can be done with the following formula (I’m converting to base 10):
$$Lo{g_{10}}\left( X \right) = \frac{{Ln\left( X \right)}}{{Ln\left( {10} \right)}}$$
So, just calculate the natural log of your number (use the LN key), and then divide it by the natural log of the new base. For example,
$$Lo{g_{10}}\left( 3 \right) = \frac{{Ln\left( 3 \right)}}{{Ln\left( {10} \right)}} = 0.478$$
Note that the TI-84 Plus does have a LOG key for calculating base 10 logarithms. Still, if you need another base the above formula will work — just change the 10 to your selected base.
Q: How can I clear the memory of all variables and lists?
A: Unlike a complete reset (see below) this is pretty safe to do, though be careful not to delete any lists or variables that you need to save. To clear all memory in a TI 84 Plus:
- Press 2nd MEM (that is the second function of the + key)
- Select 2 (Mem Mgmt/Delete)
- Select 1 (All)
- Scroll through the list and delete anything that isn’t important using the DEL button.
- To exit, press 2nd MODE (Quit).
Q: How can I completely reset my TI 84 Plus back to the factory default settings?
A: Be careful with this as it will remove any programs that you may have stored in the calculator. With that disclaimer stated, here’s how to reset it:
- Press 2nd MEM (that is the second function of the + key)
- Choose 7 (Reset)
- Scroll right so that ALL is selected
- Press 1
- Press 2 (Reset, and read the warnings)
Note that it is possible that a reset may affect the contrast of your screen. If necessary, you can change the contrast of the screen on the TI-84 by pressing 2nd and then the ⯅ (or ⯆) button. You may have to do this repeatedly.
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