How a Financial Calculator Can Help Teens Make Deci$ion

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How a Financial Calculator Can Help Teens Make
Deciion about Financing a Vehicle
2002
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Marsha A. Goetting Ph.D., CFP, CFCS

• Professor Extension Family Economics Specialist
• Department of Agricultural Economics
  Economics

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Have you wondered?

• What the monthly payment would be on your dream
  car?

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Have you wondered?

• How much you would save in interest charges by
  increasing your payments amount?

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Workshop

• You are going to learn how to solve these
  similar problems quickly easily by using a
  financial calculator

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Financial Calculator

• Texas Instruments BA-35 Solar Business Analyst
• Cost about 20 at most discount stores

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Introduction

• Getting Acquainted with your Financial Calculator

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Turn on
CE/C
Fix
MODE
2nd
CPT
AC/ON
X 12
12
N
i
PMT
PV
FV
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Financial Mode

• If FIN is not lower left corner
• Press

AC/ON
CPT
MODE
Fin 0.
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Decimal Function
Fix

• Press

2nd
CPT
2
FIN 0.00
2nd
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Clearing Screen/Display

• Press key once
• Clears Display
• Corrects Incorrect Entries
• Clears word Error

CE/C
12
Clearing Financial Registers
CMR

• Press key
• Clears numbers in registers display

CE/C
2nd
CE/C
N
i
PV
PMT
FV
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Finance Keys
N

• Number of Periods
• Interest Rate
• Payment Amount

i
PMT
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Finance Keys
PV

• Present Value
• Future Value
• Compute key

FV
CPT
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Loans

• Calculate payment amount for car loan when we
  know
• Amount borrowed
• Interest rate
• Length of loan

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Dream Car

• Finance 21,000
• APR 6
• 5 year loan

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Car

• Clear registers 2nd CE/C CE/C
• Loan Amount 21,000 PV
• Periods 5 x 12 60 N
• Rate 6 12 0.50 i
• CPT PMT 405.99 (dont clear)

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Calculate Interest

• How much interest paid in 5 years?

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Interest Paid

• 405.99 payment
• x 60 periods
• 24,359.33 paid
• - 21,000.00 car cost

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Interest Paid

• 3,359.33 interest paid over 5 years

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Cheaper Wheels

• Finance 15,500
• APR 5.8
• 5 year loan

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Cheaper Wheels

• Clear registers 2nd CE/C CE/C
• Loan amount 15,500 PV
• Periods 5 x 12 60 N
• Rate 5.8 12 0.50 i
• CPT PMT 298.22 (dont clear)

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Calculate Interest

• How much interest paid in 5 years?

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Interest Paid

• 298.22 payment
• x 60 periods
• 17,893.14 paid
• - 15,500.00 car cost

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Interest Paid

• 2,393.14 interest paid over 5 years

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Affordable Payments

• Anthony
• Monthly payment 200
• How expensive of a car can he AFFORD?

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If

• 5 year loan
• Interest Rate
• 4.5

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Affordable Car???

• Clear registers 2nd CE/C CE/C
• Payment 200 PMT
• Periods 5 x 12 60 N
• Rate 4.5 12 0.38 i
• CPT PV 10,727.88

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Summary 200 PMT

• 5 year loan
• 4.5 Interest rate
• Affordable Loan
• 10,727.88

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Affordable Payments

• Susie 300 monthly
• How expensive of a car can she AFFORD?

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Affordable Car???

• Clear registers 2nd CE/C CE/C
• Payment 300 PMT
• Periods 5 x 12 60 N
• Rate 6.5 12 0.54 i
• CPT PV 15,332.60

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Summary 300 PMT

• 5 year loan
• 6.5 Interest rate
• Affordable Loan
• 15,332.60

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How Long to Pay Off?

• Tracy
• Afford 180 payments
• Cost of car 15,430
• Interest rate 7.2

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Car 15,430

• Clear registers 2nd CE/C CE/C
• Credit balance 15,430 PV
• Rate 7.2 12 0.60 i
• Payment 180 PMT
• CPT N 120.73 months
• 12 10.06 years

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Who would finance?

• Dealer--No
• Corporation--No
• Mom Day--Maybe

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Alternatives

• Save for bigger down payment
• Find less expensive car
• Get another job

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How Long to Pay Off?

• Ryan
• Afford 230 payments
• Cost of car 19,500
• Interest rate 6.6

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Car 19,500

• Clear registers 2nd CE/C CE/C
• Credit balance 19,500 PV
• Rate 6.6 12 0.55 i
• Payment 230 PMT
• CPT N 114.48 months
• 12 9.54 years

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Who would finance?

• Dealer--No
• Corporation--No
• Mom Day--Maybe

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How a Financial Calculator Can Help Teens Make
Deciion about Financing a Vehicle
2002