Time Value of Money Keys on Financial Calculator
The TI BAII Plus calculator is an important tool for any student taking finance courses. Most
professors point out early on that this calculator will become your best friend, so it is important to
know it well. Mastering your ability to operate the Time Value of Money keys will be the first step
in the essentials of finance. These instructions will show you how to set up your calculator and
how to operate the TVM keys through various problems. A basic understanding of financial
vocabulary will help to understand what the example questions are asking.
Step One: Change the number of decimal
places displayed. Be sure to read the “Notes”
written below if you have trouble finding
certain keys.
Set up for 6 decimal places:
-These keys are listed in the exact order they
should be entered.
Enter the pictured keys in order:
Press: 2nd, FORMAT, 6, ENTER, 2nd, QUIT
Note: The FORMAT key is also the ( . ) key
along the bottom row.
The QUIT key is also the CPT key at the
top left.
Step Two:
Set your calculator to add
interest to the principal once a year. (annual
compounding)
Set up for annual compounding:
-Enter these keys in the exact order shown.
Press: 2nd, I/Y, 1, ENTER, 2nd, QUIT
Note: The I/Y key is one of the Time Value of
Money or TVM keys in the third row.
Step 3: How to input numbers into the TVM keys.
5 TVM Keys
N = total number of payments
I/Y = annual interest rate
PV = present value
PMT = payment amount
FV = future value
Note: When inputting a number for any TVM
key, always type the number prior to
selecting the key.
Example: If N = 2, then you will press “2” and
then the “N” key.
First:
Then:
Step 4: How to enter a negative number for a TVM key.
Note: When entering a negative number, you
will type the number first and then the
“+/-” key. The “+/-” is the symbol for a
sing change located below the “3” key.
This key is not the minus sign.
PV = -1000
First:
Example: If the Present Value is -1000, then
you will enter “1000” and then the “+/-”
key before pressing “PV”.
Then:
Step 5: Clear your TVM worksheet. You MUST do this before every new problem.
Press: 2nd, CLR TVM, 2nd, QUIT
Note: The CLR TVM key is also the FV key
on the TVM row.
Always clear TVM worksheet before inputting new data.
Step 6:
Enter data in the TVM keys to find an unknown variable. After all of your given
information is entered, press the “CPT” key and then the TVM key of the variable that you are
solving for.
Note: The “CPT” key is often confused with the “=” key. The compute “CPT” key is at the top
left.
Example: If all other data is entered and you
are solving for the Present Value or
“PV”, then you will press “CPT” and
First:
Then:
then “PV”.
Step 7: Practice entering the data in the order given for these problems below. There is one
example problem for each of the 5 variables. When there are problems including values for
Present Value and Future Value, you will have to enter one of them as a negative. The calculator
must see a sign change between the two. If you are only given one of them, then you can enter
that number as a negative to make your solution a positive. When Payments are involved, if you
are making payments then PMT will be a negative. If you are receiving payments, then PMT is a
positive. Lump sum problems will not have payments and the “PMT” will equal 0. If you
encounter an ERROR sign or any other issues, then look on the last page of these instructions for
suggestions and quick fixes.
Clear TVM worksheet (2nd, CLR TVM, 2nd, QUIT)
Example: Present Value of a single amount (PV = ?)
You want to receive $500 in 1 year. How much should you invest for 6% interest compounded
annually. (This is a lump sum problem, therefore, there are no payments and your PMT = 0).
Given
Enter
Solution
N=1
“1” “N”
I/Y = 6
“6” “I/Y”
PMT = 0
“0” “PMT”
FV = 500
“500” “FV”
PV = ?
“CPT” “PV”
-471.70
Note: The answer will appear as a negative because the calculator needs a sign change between
the Present Value and Future Value. Your answer should be written as $471.70.
Clear TVM worksheet (2nd, CLR TVM, 2nd, QUIT)
Example: Future Value of a single amount (FV = ?)
You invest $500 today at 12% compounded annually. What is value in 5 years?
(Your Present Value will be entered as a negative number because you have invested $500).
Given
Enter
Solution
N=5
“5” “N”
I/Y = 12
“12” “I/Y”
PV = -500
“500” “+/-” “PV”
PMT = 0
“0” “PMT”
FV = ?
“CPT” “FV”
881.17
Note: To input a negative number, enter the number first and then press the “+/-” key.
Clear TVM worksheet (2nd, CLR TVM, 2nd, QUIT)
Example: Find interest compounded annually (I/Y = ?)
Given that your Present Value is $5,000 and your Future Value is $10,000. What will your
Annual Interest Rate be over the course of five years?
(You can enter either PV or FV as a negative. Both options will give the same interest rate).
Given
Enter
Solution
N=5
“5” “N”
PV = -5,000
“5,000” “+/-” “PV”
PMT = 0
“0” “PMT”
FV = 10,000
“10,000” “FV”
I/Y = ?
“CPT” “I/Y”
14.87
Note: The computed value is an interest rate and is given as a percentage. (14.87%)
Clear TVM worksheet (2nd, CLR TVM, 2nd, QUIT)
Example: Calculate number of periods (N = ?)
If the Present Value is $100, how many periods will it take for the Future Value to be $200 at
10% interest?
(Either PV or FV can be entered as a negative. But, intuitively, it should make sense for the
Present Value to be the negative value entered).
Given
Enter
Solution
I/Y = 10
“10” “I/Y”
PV = -100
“100” “+/-” “PV”
PMT = 0
“0” “PMT”
FV = 200
“200” “FV”
N=?
“CPT” “N”
7.27
Note: The solution is given in years. (7.27 years)
Clear TVM worksheet (2nd, CLR TVM, 2nd, QUIT)
Example: Find Payment amount (PMT = ?)
How much will your monthly payments be if you take out a 60 month $25,000 loan at 6%
interest?
Note: This question requires the interest to be converted into a monthly percentage since there
are 60 payment periods over 60 months. This is done by dividing the interest rate by the number
of periods in a year. (There are 12 months in 1 year, the interest will be 6/12 or .5).
Given
Enter
Solution
N = 60
“60” “N”
I/Y = 6/12 or .5
“.” “5” “I/Y”
PV = -25,000
“25,000” “+/-” “PV”
FV= 0
“0” “FV”
PMT = ?
“CPT” “PMT”
483.32
Common Issues
ERROR 5: If this shows up on your screen, then you are missing a sign change. Check your
entered values for the Present Value “PV” and the Future Value “FV”. If there is no sign change
between these two then the ERROR 5 message will continue to appear.
Answer is a NEGATIVE: You haven’t necessarily done anything wrong here. The number
computed, whether it is shown as a negative or a positive, is the correct answer as long as you
write is as a positive. If you are solving for the Future Value, then you can enter your Present
Value as a negative and your FV will be computed as a positive. The calculator requires a sign
change between the FV and PV. You should naturally be able to recognize when a number
should be negative by thinking of it as either a cash flow in or a cash flow out. For example, an
investment in an asset would be a cash flow out because you have lost the opportunity to spend
that money on something else.
Note: In the future, when solving for problems that involve payments towards loans and
annuities, you can always remember that PMT should be negative when making payments
towards a loan and PMT should be positive when payments are received from an annuity.
TVM worksheet keeps DISAPPEARING: Make sure you are hitting the
“CPT” key to
compute the unknown value and NOT the
“=” key. After you have hit the “CPT” key, you
should then press the TVM key of the value that you are looking for.