HP10BII+ wrong PMT Answer

[DEBO109]

Hi guy,

I am currently studying for the CISI Financial Planning Exam. We have been given an example question of the following:

N=15

I/YR=4.5

PV=0

FV=-150,000

The CISI provide an answer of £6,906.29

My calculator seems to give me an answer of £9,703.73 (please note this is on beginning mode)

[David_M]

Your calculator is actually giving the correct answer, but unfortunately for a different problem than the one you are attempting to solve.

It is common to think of TVM problems as being some combination of N, I, PV, PMT, and FV variables.  It may be better to think of them as N, I, PV, PMT, FV, Mode, and P/YR problems, because each of those variables/modes needs to be considered for every solution.

In particular for this example, consider the P/YR setting (periods per year, down-shift PMT key).  The default setting for the 10bII+ is 12, and the answer you are seeing indicates that is what is currently set on your calculator.  Your expected answer of 6,906.29 implies that this particular problem has only 1 payment per year, so you need to change that setting by pressing:

1 <down-shift> PMT (ie. P/YR)

Now when you press PMT, the result should be as expected.

Important notes:

• The P/YR setting will remain in effect until you explicitly change it, either by storing a new value in it or by performing a full reset (ON-N-FV keys held down simultaneously).  It is not reset if you clear the TVM variables.
• The calculator will briefly display the current P/YR setting when you clear the TVM variables, and you can also check it at any time by pressing:
  RCL <down-shift> PMT

Hope this helps!