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Top 3 Uses for a Financial Calculator
Daniel Horowitz

April 30, 2019
If you have taken a college course related to business or economics, it’s highly likely that you’ve used a financial calculator during your studies.
For most careers involved in these industries, this type of calculator can be the most efficient and effective way to calculate rates, conversions, compound interest, and much more.
It’s also useful for handling many basic functions that can help you plan your monthly expenses and potentially make better financial decisions. For these reasons and more, a financial calculator can be a valuable tool. We’ll talk in a moment about the top three uses for a financial calculator.
But first, let's take a look at exactly what a financial calculator is.
What is a financial calculator?
A financial calculator is a device designed to perform certain equations that a basic calculator can’t handle. It is created with standalone keys, not available on other types of calculators, which allows it to perform more direct calculations. This can include functions such as simple interest, compound interest, cash flow, and more.
One of the benefits of using a financial calculator as opposed to a basic one is that you can program it to add specific functions that are applicable to your work.
Even if the manufacturer doesn’t offer certain equations as an option, you can program your device in order to calculate any necessary equations. These are often fairly simple to program, so you should be able to do it on your own without any real indepth programming knowledge.
Some financial calculators also include the ability to graph financial calculations, which can be useful in economics or calculating costsell margins. The HP financial calculator can be used for a variety of industries or for college accounting and finance classes.
The basics of using a financial calculator
A financial calculator can be fairly simple to use once you learn where certain functions are located, even if you weren’t taught how to use one in the past.
Time value of money
The first concept you’ll want to learn is the time value of money. For almost every industry involved in finance, the time value of money is the most common equation you’ll use. Once you have this basic equation down, you can start to master the other functions of a financial calculator.
This economic principle means that each dollar you receive today has a higher value than it would in the future. This can be incredibly important information to know when you are considering a loan or mapping out your budget over a period of time.
It’s also very useful if you work with investments so you have clear expectations of what your final numbers should be. With a financial calculator, you can also make the determination if an investment or a home is worth the initial down payment.
Depreciating value
Once you understand the main idea of time value, it comes down to knowing how to program your financial calculator to handle certain tasks. There are some buttons on your device that you won’t find on a basic calculator.
Of course, the number keys are what you’ll use most often, and these should also be the most familiar to you.
However, a financial calculator also allows you to operate with negative numbers, which can be necessary when calculating a purchase that requires a down payment or if you would like to calculate depreciating value.
Financial functions
As for performing basic functions  addition, subtraction, multiplication, and division  these buttons should look almost the same as devices you may have used before.
You’ll also see other keys that are unique to this type of calculator, such as I (interest rate), N (number of payments), and PMT (payments).
Uses for a financial calculator
Here are three ways you can use your financial calculator to help you solve a variety of equations.
1. Basic equations and storage
At the top of your financial calculator, you’ll find the time value of money keys. Each is marked with certain letters (N, I/YR, PV, PMT, and FV) corresponding with the function they provide.
On the left side, you’ll also see a set of gold and purple keys that are used to shift through the various functions you may need to solve an equation.
They indicate an alternative function for other keys because many of the keys have more than one purpose on this type of calculator.
After powering on the calculator, clear the device of any other problems you may have been working on.
 To clear out your history, simply press the Gold key and then the C key to start a new equation.
 If you need to recall numbers from something you were working on before, press the M key located in the center of your calculator.
 For a problem that you have programmed in specifically, use the RM key directly next to it.
Of course, it’s likely that you may need to store several numbers instead of just one or two. When you’re dealing with more complex equations that require numbers to be recalled at some point, you’ll need to store them for future use.
 First, perform your calculation and come up with a specific number.
 Press the Gold key, and then the STO key.
 You’ll then need to choose a number from 09 where you would like to store your value.
 When you need to recall a number that you have stored previously, press the RCL key and the number (09) where you chose to store it.
2. Calculating the time value of money
This is one of the most essential calculations that you will perform on your financial calculator. In fact, the device was designed for this to be one of the main functions most calculated. It should be fairly intuitive to pick up the basics, but there are some common mistakes you can avoid.
Time value components
One common mistake is entering inconsistent time value of money components.
 In order to receive the right results, the frequency of the PMT, N, and I components need to match.
 You will need to determine whether the problem is daily, or weekly, or monthly.
 Then make sure that each number you enter matches that value so you come up with the right answer.
Interest rate
Most financial calculators, including the HP 10BHII, have builtin settings that automatically adjust to the interest rate depending on which time period you choose.
 However, you will need to program in the N and PMT components in order to receive the correct calculation.
 For best results, it’s recommended that you set the payments per year to a simple number (such as 1).
 To do this, press the 1 key followed by the Gold key and then the PMT key.
 This will make it much easier to perform calculations by year.
Present value of money
One of the simplest equations you can perform on your calculator is determining the present value. This is especially useful if you’re looking for how much you’ll need to invest in bonds, investments, or any asset in order to receive a certain value in the future.
Future value of money
You can also solve for future value, which is the exact number you’ll earn after putting in the initial investment. This is another essential calculation to know as a financial professional who may be advising clients on which investments could work best for them and what their returns would be over a number of years.
Payments
Another useful calculation is solving for payments.
 You may not always want to use the value of a year as your measure of consistency, particularly when solving for monthly payments.
 Make sure you know your compounding periods, which may not always be the same as the yearly value you might have entered.
 Knowing how often your interest compounds is the first step toward determining your final payment amount.
3. Solving for interest rate
If you plan to make any sort of investment, it can important to know the value you’ll receive in the future. This is similar to solving for future value, but it also allows you to solve for the unknown, which provides you with a better estimate of the money you will receive on an investment.
Solving for an interest rate can be extremely beneficial for real estate and financial professionals because it allows you to calculate the value of an asset over time. A financial calculator can help you find out that information in a few seconds.
 First, enter the current value of the asset and the number of years that you are expecting to have it.
 Once you know four of the five components, solve for the total amount the asset will be worth even after the initial payment over a number of years.
 This also works for investments that depreciate in value.
If you already have the final number, you can also solve for the period of time that it will take to get there.
 By taking the present value of your asset and inputting the interest rate and future value, you can determine how many years it will be before you reach your financial goal.
 You can also choose which period you want to solve for, such as weeks, months, or years.
 Additionally, you can determine how many consistent payments will be needed in order to pay off a certain value over time.
 After you have identified your interest rate and the amount of time you would like to pay off your expense, you can then solve for a concrete number that allows you to plan your expenses.
 You can also convert this to yearly, monthly, or weekly values, which can be helpful depending on the amount of time you wish to pay off a loan or other financial asset.
In summary
From helping out with your work duties to narrowing down personal finance goals, a financial calculator can be extremely useful for a variety of purposes.
If you’re involved in a profession that requires access to information on compound interest or the value of money over time, then it’s likely that you’ll need a financial calculator on hand.
This includes a number of industries, such as real estate, financial planning, and economics. A financial calculator is helpful for solving basic functions, too, making it an overall more versatile option than a standard calculator.
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About the Author: Daniel Horowitz is a contributing writer for HP® Tech Takes. Daniel is a New Yorkbased author and has written for publications such as USA Today, Digital Trends, Unwinnable Magazine, and many other media outlets.