BA II Plus time value of money (TVM): keystrokes and a worked example

The keys

Worked example

Five annual payments of 1,000 at 8%. What are they worth today?

The trap

Signs follow cash: money in is positive, money out negative. Entering PV and FV with the same sign on a bond gives an error or nonsense.

Watch it on the calculator

From our BA II Plus keystrokes video (starts at this step). Open on YouTube.

The terms behind it

• Present valueWhat a future cash flow is worth today, found by discounting it at a rate that reflects its risk and timing.
• Future valueWhat a sum invested today grows to by a stated date at a stated rate.
• AnnuityA series of equal cash flows at equal intervals.
• PerpetuityAn annuity with no end date — a level cash flow received forever.

More BA II Plus keystrokes

• How to set up the BA II Plus for the CFA and FRM examsOnce, before you start practising — and again if the calculator is reset.
• BA II Plus annuity due: BGN mode keystrokes and the trapLeases, rent, insurance premiums and retirement withdrawals that begin today.
• BA II Plus NPV and IRR: cash flow worksheet keystrokesCapital budgeting, private equity cash flows and money-weighted returns.
• BA II Plus effective annual rate: the ICONV worksheetComparing quoted rates with different compounding, and EAR questions.
• BA II Plus loan amortization: interest and principal for any yearMortgage payments, interest and principal splits, and outstanding balances.
• BA II Plus mean and standard deviation: the DATA and STAT worksheetsSample statistics on returns in Quantitative Methods.
• BA II Plus bond price from yield: keystrokes and the semi-annual trapFixed income pricing at every level, using the TVM keys.