# Help with Calculating - Posted by Dave H

Posted by Jeff-oh on May 04, 2005 at 11:44:08:

The best resource is the manual that came with the calculator. It has good explinations and clear examples you can follow.

Help with Calculating - Posted by Dave H

Posted by Dave H on May 03, 2005 at 18:51:18:

I’m feeling a little thick today with my financial calculator. I was showing a mobile home for sale today and the prospective buyer asked what the payments were. Using Lonnie’s word I said I would consider anything that was reasonable. She said she could pay \$300 per month so I turned on my calculator, put in the financed amount of \$14,500 and interest rate of 12.75% and her payment of \$300 and solved for N. The number I get is 39.21 which if you muliply by \$300, you get \$11,764. That’s obviously less than the amount I am financing. What am I missing here? Do I have to calculate future value first and then divide by \$300 to get my N. I want to be able to have my buyers name a payment amount and be able to tell them how many payments they will have to make. Thanks for the help.

Dave

Re: Help with Calculating - Posted by Jeff-oh

Posted by Jeff-oh on May 04, 2005 at 07:40:01:

Dave,

The error is you entered the loan as a positive amount into the equation it must be a negative number…

Logic as to why…
A loan is owed amount of money, by the borrower thus negative…
It is a liability or a negative to their net worth…
Thus the loan amount must be entered as a negative number.

I/y = 12.75%
PV = -\$14,500
PMT = 300
FV=0

QED: N= 68.2

Ignore this part if it does not make since to you…
What you calculated is how many months it would take to accumulate \$14,500 if you invested \$300/month with a 12.75% interest rate…

i.e.: If your bank had a savings account paying 12.75%. and you deposited \$300 a month then in 39.2 months your balance would be \$14,500. or you deposited \$11,764 into the bank and received \$2,736 in interest.

Hope that helps explain what happened.
Jeff

Re: Help with Calculating - Posted by JeffB (MI)

Posted by JeffB (MI) on May 03, 2005 at 21:52:22:

Try entering FV as a zero. Which will be the balance at the end of the note term. I have to do this on mine, though it seems like it should be optional.

Re: Help with Calculating - Posted by Sterling

Posted by Sterling on May 03, 2005 at 19:43:59:

Try entering her payment as a negative number.

Re: Help with Calculating - Posted by Dave H

Posted by Dave H on May 04, 2005 at 11:24:55:

Thanks for the clear explanation Jeff. I got the right answer by making 300 negative but now I know the logic behind why the PV should be negative.

And it’s good to know what I was actually calculating.

I have calculator power but I couldn’t find anything in there to help with this particular problem.

Do you recommend any resource (other than this site for learning the calculator.

Thanks,

Dave