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11-29-2019 12:40 PM
Hi there, I am following this equation from my text book:
Calculate the monthly payment:
I/YR = 6.5%
PV = $150,000
FV = $0
PMT = Unknown
Clear all variables: 0.00
Store # of payment periods: 300.00
Store adjusted interest rate: 6.41
Store present value: 150,000.00
THE ANSWER THE TEXT SHOWS: 1,004.74
HOWEVER my HP 10BII+ gives me: 1,004.39
This minor variance, in following equations precedes to screw up my answers by larger differences.
I have done a calculator reset and I still get the same difference. Anyone know what I am doing wrong? Do I need to change a setting?
Any help would be appreciated, my exam is in a week!
Solved! Go to Solution.
11-29-2019 04:33 PM
Since the answer you're getting with the HP 10bII+ is also what I'm getting, and is the same as what the HP 12C gives, as well as every online TVM calculator I tried (such as THIS one), I strongly suspect that either your textbook's answer is wrong or the "adjusted interest rate" is not exactly 6.41 (possibly there are more decimal places in it?).
11-29-2019 05:40 PM
Thank you for the insight. Within the text (this example, not a question) starts at 6.5%, and gives me the adjusted of 6.41 to use moving forward in the example, however, when I do the adjustment myself I get 6.4137... using this number I get the 1004.74 (rounded to two decimal places). Thank you for pointing out the source of my error... I was worried that future calculations would be off (with different numbers), but it's just two extra numbers within the interest adjustment that were giving me the slight difference.
11-30-2019 11:18 AM
Rounding issues in the display of intermediate results can often cause confusion of this sort. Add this to other considerations (Canadian mortgage, BEGIN/END mode, periods/year, etc.), and you've got lots of sources for differences to consider.
Perhaps the text was written with the assumption that you would be computing the interest rate as part of your chain of calculations as opposed to entering it manually. Bear in mind that the 10bII+ (like most calculators) maintains more digits for calculated values than the rounded display mode shows.
One way to do this computation on a10bII+ (us indicates up-shift, ds indicates down-shift):
Clear the current TVM environment and set END mode
(us) C MEM TVM
(ds) Beg/End (only if needed to set END mode)
Compute the adjusted interest rate for a Canadian mortgage
6.5 (ds) NOM%
2 (ds) P/YR
12 (ds) P/YR
Enter/calculate the remaining TVM variables
...for the expected final result of -1,004.73567899 (which of course rounds to -1004.74)