TI-89 Financial Functions

The TI-89 graphing calculator has built-in financial functions that can assist with various financial calculations, saving time compared to manual calculations. These functions primarily revolve around time value of money (TVM) calculations, but also include amortization and cash flow analysis.

TVM Solver

The core of the TI-89’s financial capabilities lies in its TVM Solver. To access it, typically you’ll navigate through the APPS menu to the Finance application. Within the Finance app, you’ll find the TVM Solver. This allows you to solve for one of the following variables, given the others:

N: Number of compounding periods.
I%: Interest rate per year (entered as a percentage, not a decimal).
PV: Present Value (initial investment or loan amount). Make sure to use appropriate sign conventions.
PMT: Payment amount per period. Again, be mindful of sign conventions: payments you make are generally negative, payments you receive are positive.
FV: Future Value (value at the end of the investment/loan).
P/Y: Payments per year.
C/Y: Compounding periods per year.
PMT: BEGIN/END: Specifies whether payments are made at the beginning or end of the period.

To use the TVM Solver, enter the known values for each variable. Then, move the cursor to the variable you want to solve for and press the SOLVE function (usually accessed by pressing ALPHA and then ENTER). The calculator will compute the missing value.

Amortization

The TI-89 can also generate amortization schedules. This shows the breakdown of each payment toward principal and interest. After solving a TVM problem, you can access the Amortization function within the Finance app. You’ll specify the payment periods for which you want the amortization schedule, and the calculator will display the interest portion, principal portion, and remaining balance for each period.

Cash Flow Analysis

The TI-89 can perform basic cash flow analysis, including calculating Net Present Value (NPV) and Internal Rate of Return (IRR). These functions are accessed within the Finance app or directly from the calculator’s home screen. To calculate NPV, you’ll need to input the initial investment (usually a negative value) and the subsequent cash flows. To calculate IRR, you provide the same cash flow information, and the calculator will determine the discount rate that makes the NPV of the cash flows equal to zero.

Important Considerations

Remember to clear the TVM variables before starting a new problem. Incorrect values from previous calculations can lead to errors. Pay close attention to sign conventions. In general, cash inflows are positive, and cash outflows are negative. Also, carefully consider the compounding frequency (C/Y) and payment frequency (P/Y), as they often differ. It’s crucial to understand the underlying financial concepts to interpret the results correctly and avoid misusing the calculator’s functionality.