HP 12C Error 5

[DavidVictor]

I am getting an error 5 when trying to do a simple TVM problem wondering if anyone else has experienced this and/or may have some tips.

I am entering

PV= -3000

PMT = 50

FV = 0

i = 10.5

calculate for n and I get Error 5

if I make the following change

i =-10.5

calculate for n I then get the answer 18

This is the correct answer however the a negative interest rate should not have to be input.  My proffesor and me were both baffled by this.

[Maké]

Hi!, @DavidVictor:

Welcome, to Forum !.

Remember, the sign convention: Money Received = Positive Number, Money Paid Out = Negative Number.

See, this link ... http://support.hp.com/us-en/document/bpia5185

[DavidVictor]

That is what was done here.  -3000 as PV and 50 as PMT.   My professor did the same calculation on his 12C and it worked.  He also failed to get it to work on mine.  I have attempted to reset the device also.

[Maké]

Hi!, @DavidVictor:

The result, in mine HP12C emulator, is correct, and is = 18.

I, entry ...

PV = -3000

PMT = 50

FV = 0

i = -10.5

n = 18

You needed assume, the signal convention.

[DavidVictor]

Are you saying that a negative interest rate is appropriate? 

[Maké]

Hi!, @DavidVictor:

In HP Financial Calculator's, for solve, of TVM, is used ever ...

The sign convention: Money Received = Positive Number, Money Paid Out = Negative Number.

Note: For your help, in the future, if is necessary ... http://support.hp.com/us-en/document/bpia5202

Other, help ... http://www.tvmcalcs.com/index.php

[BartdB]

---

@DavidVictor wrote:

I am getting an error 5 when trying to do a simple TVM problem wondering if anyone else has experienced this and/or may have some tips.

I am entering

PV= -3000

PMT = 50

FV = 0

i = 10.5

calculate for n and I get Error 5

if I make the following change

i =-10.5

calculate for n I then get the answer 18

This is the correct answer however the a negative interest rate should not have to be input.  My proffesor and me were both baffled by this.

---

Hi,

I do not see how n=18 is the correct answer. Even with 0% interest it would take 60 payments of 50 to pay off 3000.

With 10.5% interest PY I get n=86 (with the last payment a partial payment of approx. 22.5).

Notes with the 12C:

When entering interest i   this is the periodic interest rate, i.e. if you are paying 12 payments per year (i.e. monthly), the annual interest rate must be divided by 12 and stored in i .

The 12C provides a shortcut for doing this:  

blue g function and i button

This automatically stores interest divided by 12 into i.

If you do not use either method, the 12C will see the interest as 10.5% per month, or 315 per month which 50 will never pay off - hence error 5.

Please see p32 to  p50 in the HP-12C User's Manual link 

Regards.

[Maké]

Hi, @DavidVictor:

You too, have one help, from ... http://www.tvmcalcs.com/calculators/hp12c/hp12c_page1

They have, four pages.

[David_M · Accepted solution]

Perhaps I'm misunderstanding something, but it seems to me that Error 5
is actually the correct response with your original given variables.

It seems as though your original variables are suggesting the following:

- You are making an initial investment in something worth 3000 units
(PV=-3000)

- At the end of each period, you are removing 50 units of value from
that asset (PMT=50)

- At the end of each period, the asset gains 10.5% of its value (i=10.5)

- You expect the future value of the asset to (somehow) reduce to 0
(FV=0)

Solving for n is basically asking the question "after how many periods
will the value of the asset decrease to 0?"

The interest rate of 10.5% accrues more in interest than the 50 units
removed for each period. So with these given variables, it's impossible
for the asset's value to ever reduce to 0. The value actually increases
each period instead of decreasing.

Any one of the following should make this scenario solvable:

- Change the interest rate to a low enough value that the asset accrues
less interest than 50 units per period (eg. less than (50/3000)*100 )

- Change the PMT amount to something greater than the interest which is
accrued each period

- Change the FV to a greater value than 3000 units since the asset grows
over time

- Change the interest rate to a negative value, which implies
depreciation of the asset

That explains why the negative interest rate works, and hopefully gives
you a bit more insight into what's happening in this scenario.

[David_M]

Oh, and there's at least one other single-variable change that would make this scenario solvable.  I'll leave that as a homework assignment to determine.