APPLICATION MANUAL FINANCIAL CALCULATORS FC100V, FC200V Specific Applications in addition to various other applications that can be performed
by FC are summarized below: Simple Interest Calculation
Compound Interest calculation
Cash Flow Calculation
Amortization calculations
General and function calculation
Statistics calculations
Interest rate conversion calculations
Cost / selling price / margin calculations
Day or date calculation
Depreciation calculation
Bond (Annual/yield to maturity (YTM) calculations)
Break even point analysis
Simple Interest calculation
Explanation
Simple Interest calculations as performed mainly by banks and loan providers or person lending or borrowing funds at simple rate of interest. The formula for calculation shall be as follows: SI = PV x n / 365 x I% SFV= PV+SI PV= Principal N = Number of interest periods I = Annual interest rate SI = Simple Interest SFV=Interest + principal
Example
An amount of 5000/ is borrowed at the rate of 9% per annum for 90 days, calculate the simple interest.
Principal (PV) Interest (I %) Days (n) SI SFV
= = = = =
INR 5000 9% 90 solve solve
5000x90/365x9/100
=110.95 =5110.95
Operation
Press
key and using the cursor key enter the following data with exe key Simple Int. Set Dys I% PV SI SFV ALL 1 : 365 or 360 days : 90 :9 : 5000 : Solve : Solve : Solve SI= 110.958904
2
SFV= 5110.958904
3
SI= 110.958904 SFV=5110.958904
For calculating the simple interest bring the cursor key to SI and enter the solve key and the answer appears as 1 above Press ESC key and bring the cursor by using the Key and enter the Solve key and the answer appears as 2 and using the ESC key bring the cursor to ALL key and press SOLVE key and the answer appears as 3 above. Note: The days in a year can be adjusted as 360 days or 365 days depending upon the usage to adjust press SMPL and then SET key and enter EXE key and chose the option of 360 or 365 days.
Compound Interest calculation
Explanation
Most of the banks and person dealing with funds use the word compounding interest annually, semiannually or quarterly etc. to understand better compound interest would mean calculating the interest on interest also. The mathematical formula shall be as follow:
• •
C.I. = P , where C.I. = compound interest If the interest rates for the successive fixed periods are r1%, r2%, r3% ..., then A (amount) is given by
A=P
... ….., where A= amount & principal , P= principal
For example continue with the same example in previous sheet. If the period is 3 years then CI would be C.I. A =5000 x {(1+ .09)³1} = 1475.145 =5000 + 1475.145 = 6475.145
Operation
Press
CMPD key
Input the following using scroll and exe keys Set N I% PV PMT FV : : : : : : begin / end select End using scroll and exe key press 3 and enter exe key press 9 and enter exe key press 5000 and enter exe key leave blank or press 0 and enter exe key* Press solve key, see the answer appears as 6475.145
* Use of option PMT is explained in next page Note: Using scroll key please enter the P/Y = 1 and C/Y = 1 as the same represents the Installments per year and Compounding per year respectively. If the compounding is semi annually then C/Y should be selected as 2 and for quarterly the same should be selected as 4. Press ESC key to come back to previous screen
Note:
Note: To clear variables from the memory is to press SHIFT key and 9 key and EXE key and chose the correct option to clear either setup, memory or all variables from the memory
EMI calculation CMPD continues….
A very important tool for finance companies having the business of lending money and all those also borrowing money and in the need to know that how much monthly installment need to be paid for a particular loan. Typically a person needs to know the present value of amount borrowed/lend and the interest rate to be paid also the total number of installments to be used while returning the amount borrowed. i.e. PV = amount borrowed or lend i.e. INR 50000 I% = interest rate i.e. 12% p.a. i= I%/12/100 = 0.010 N = number of installments per year i.e. 15 years = 180 times A typical way of calculating the EMI shall be taking the help of computer or a long sheet of paper and lot of time in computing and yet not very sure about the way of doing. The formula shall be as follows: PV x i x (1+ i)ⁿ = (1+ i)ⁿ1
=
180 50000 x 0.01 x (1.01) 180 (1.01) 1 = 600.08
EMI calculation without a calculator having the solving power like this is just impossible and doing little simulations and variations in interest, principal etc, the working becomes very tough, but the use of FC 200V is very simple, faster and economical, let’s see Press CMPD key and using the scroll and exe key enter the following data Set N I% PV PMT FV P/Y C/Y = End key = Press 180 and enter Exe key (15 years x 12 months) = Press 12 and enter Exe key = 50000 exe key = Solve key = Press 0 and enter Exe key =12 as the installments per year is 12 the duration of loan is 15 years =12 as the compounding also is monthly so in a year 12 compounding
1. using the scroll key come back to the term we want to know and press solve key and result is available.08.
Calculate the maximum Rate of interest can be borne if EMI.
Calculate the Number of periods (i.g. period and PV is known Set = End key N = 180 periods (15 years x 12 months) I% = Solve key PV = 50000 PMT = 600.08 FV =0 P/Y =12 as the installments per year is 12 the duration of loan is 15 years C/Y =12 as the compounding also is monthly so in a year 12 compounding
2. Calculate the PV if we know how much maximum EMI can be paid Set = End key N = 180 periods (15 years x 12 months) I% = 12 PV = solve key PMT = 600.e years) wherein loan can be repaid if PV.08 FV =0 P/Y =12 as the installments per year is 12 the duration of loan is 15 years C/Y =12 as the compounding also is monthly so in a year 12 compounding
3.
.Scroll back to PMT key and enter solve key as the answer flashes 600. I% and EMI is known Set = End key N = Solve key I% = 12 PV = 50000 PMT = 600.08 FV =0 P/Y =12 as the installments per year is 12 the duration of loan is 15 years C/Y =12 as the compounding also is monthly so in a year 12 compounding
Just in simple way skip the term we want to know and enter the data in rest of the terms as before. Is it not quite amazing the result is produced in less than a minute as against probably one hour? Now we can use variation just like mortgage calculators available on the web and computer spreadsheets e.
Cash Flow Calculation
Explanation
The application mainly is used by analysis to appraise an investment proposal having a fixed stream of cash inflow after a fixed period of cash outflow.50 years
. Accept project if IRR > cost of capital. Typically an investor need to know the following to do the analysis i. Net Present Value (NPV). The net present value (NPV) method discounts all cash flows at the project’s cost of capital and then sums those cash flows. IRR The internal rate of return (IRR) is defined as the discount rate which forces a project’s NPV to equal to zero.
NPV
A typical cash flow shall work out as follows
Cash Inflow
Cash Outflow
Example
An investment would outlay an expenditure of INR 100000 in the year0 and thereafter for the next four years it generates the cash inflow at a consistent flow of 40000 per year. Net Future Value (NFV) and Payback Period (PBP) PBP The payback period is defined as the number of years required to recover a project’s cost. cash outflow and cash inflow and certain financial tools to help him to take the decision. the tools could be Internal Rate of Return (IRR). Accept project if NPV > 0.e. The PBP shall work out to be like 100000/40000=2.
12)³ 40000/ (1.The NPV shall be as follows: Particulars Year 0 Year 1 Year 2 Year 3 Year 4 Net present value cash In/Out 100000 40000 40000 40000 40000 Discounted Cash Flow @12% 100000 40000/ (1.96. Therefore. let's say you have a payment/income profile as shown above and we assume a discount rate of 12%. The common method used for IRR is
In the given case if we discount the cash flow by an estimated rate of capital of 21% shall give us the NPV equal to +1617. the significance of IRR is that for example the IRR for the above said case is 21.86% We have seen how cumbersome procedure is used to calculate the IRR and NPV imagine a person evaluating the 50100 proposals a day shall get mad and crazy. money devalues over time. If you take the difference between the net present value of the payments and the net present value of the returns.00 35714.96
As you know.21 25420.64+254.72 +21493. a rate which puts cash outflowdiscounted cash inflow equal to zero. The IRR can be derived only be trial and error method and a guessed cost of capital should be estimated otherwise the trial and error method also takes long time and is irritating.28 31887.12)¹ 40000/ (1. you get the net present value of the investment. So prudence say that you must make investment that fetches you return greater than 22%. The solution provided by FC 200 V is quite simple and we just have to input the data as follows:
⁴
(1+r)
(1+r) ²
(1+r) ³
(1+r)
₄
₃
₂
₁
CFº+
CF
+CF
+CF
+CF
=
0
.12) 100000.86% and if the money devalues at 22% then you make nothing on your investment.64 Again using the trial method we forward the rate to 22% and see the NPV coming out to be as 254.75 28471.38
= 21.64 21% + .96100000=21493. The rate at which it does is commonly referred to as the "discount rate".X 1 1617.12)² 40000/ (1. IRR If we equate the net present value to zero we get the internal rate of return.38 but the object is to bring the discounted cost of capital equal to Zero so by using the trial and error method we use the following Formula
1617. In the case shown above that turns out to be 121493.
To choose the option Press STAT Key and chose 1.86% 2.
.86% otherwise the PBP shall be calculated DCF@12% and the result shall be 3.e.Operation
For calculating the NPV at the discounted rate of 12% Press Cash Key and using the scroll and exe key input the data as follow I% Csh : input 12 enter exe key : Press exe key and input that cash out flow and cash inflow Cash outflows should be represented as () and inflow as (+) : using ESC key and scroll key press following : : : : Press Press Press Press solve solve solve solve key key key key and and and and the the the the result result result result shall shall shall shall be be be be +21493.Var press exe and AC key and select again CASH key and in the case of more than one variable using the same procedure above select other than 1Var mode.96 21.15 years / 3. X.99 years Is it not very simple and clean way of computing complex things. yes thanks to FC 200V Remember to be patient while solving IRR as calculator processes the data at the speed of _ Note:
Data editor can input the maximum number of 80 variables in case of 1var is selected or 40 in case of 2.var is selected (i.50 years* +60000* on
NPV IRR PBP NFV
*remember to remove the I%=12% / 21. Y and Freq is selected. Y or X and Freq ) and 26 in case of X.
Similarly if the compounding can be quarterly (4) or monthly (12) and accordingly results can be obtained but how complex is to solve the power of 12.g.36% and if the EEF is 14% then APR shall be 13. Interest rate: 12% compounded semi annually.54%.
Operation
Press CNVR key Input the above data using scroll and exe key N I% EEF = Press 2 and enter Exe key = Press 12 and enter exe key = press solve key and the result is 12.36%
Other way could be press i% =14 and press APR key the result shall be 13. the EEF shall be 12.54% as described above.Interest rate conversion calculations
Explanation
The conversion of annual interest rate into effective interest rate is usually used when the compounding per year is more than one. E. The conventional way of calculating EEF (effective interest rate) is:
EEF
=
1+
APR/100 n
n 1 x 100 APR EEF N Annual percentage rate (%) Effective interest rate (%) number of compounding
APR
=
1+
EEF/100 n
1/n
1
x n x 100
Example
Example of converting the annual rate is where an investor gets the return on an investment other than annual basis then his first curiosity shall be to know what my effective annual interest rate is.
.
by using the following way. The formula for calculation shall be as follows:
CST
=
SEL * (1MRG/100) CST= cost SEL= selling price MRG=margin
SEL
=
CST/ (1MRG/100)
MRG
=
(1. conversely many people use the cost as the base price for generating the %age of value addition to the cost.
. the difference is known as margin which could be profit or loss.Cost / selling price / margin calculations
Explanation
Cost and their relation with the selling price is very well known. typically margin is the selling price less cost and divided by selling price as the %age of sale price. it can be done: CST = Press 1200 and enter exe key SEL = Press 1500 and enter exe key MRG= press solve key answer shall be 20%
Note:
By inputting any two variables third variable can be calculated.(CST/SEL))*100
Operation
Select COST Key By inputting any two values the third value can be calculated.
FV. But if you want to know the breakup of any EMI or installment into Principal and Interest it shall be a quite difficult task for common man. the interest is on the full amount of loan but as you continue to pay back the principal amount keeps on reducing so is the interest amount.43 over a period of 3 years i. PRN.e. Your car loan and home loan fit that definition. N=36 months.Amortization calculations
Explanation
Amortization means "the systemic payment plan . usually in equal monthly installments. PV=principal = 10000 and Interest = i%=2.
Example
In the given case the PV = 10000 and interest rate is 2% and the PMT working out to be 286.such as a monthly payment . please note the Amortization table helps you to calculate the interest and principal on any of the installment specified. You can calculate between any month to any month i. Your credit card account doesn't because it's a revolving loan with no fixed payoff date." Interest is computed on the current amount owed "and thus will become progressively smaller as the ending balance of the loan reduces.the amount borrowed. The requirement is to know the PMT = EMI = 286. The concept of PMT." In simple meaning when you borrow money the first repayment of loan installment. BAL. ∑ PRN ETC can be understood with an easy example. INT.
Break up of PMT
300
240
180 Amount 120
60
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 Months Interest Principal
.e. Let us understand the concept of amortization in simple amortization calculator. PM1 to PM2. A part of the payment goes toward the interest cost and the remainder of the payment goes toward the principal amount . ∑INT.43 (remember EMI can be calculated by CMPD key). remember that PM2 needs to be greater than PM1. interest." So an amortized loan is for one specific amount that is to be paid off by a certain date.so that your loan is paid off over the specified loan period.
90 1.18 5.95 856.37 1.43 286.26 3.64 3.45 3.43 286.457.95
$
286.11 283.43 286.47
$
16.92 8.43 286.69 8.70 8.102.18 5.629.425.58 277.11 271.43 286.000.57 1.43 286.43 286.43 286.43 286.76 10.96 4.24 9.51 277.06 5.43 286.
Payment Date
Beginning Balance
Scheduled Payment
Extra Payment
Total Payment
Principal
Interest
Ending Balance
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
01/05/2004 01/06/2004 01/07/2004 01/08/2004 01/09/2004 01/10/2004 01/11/2004 01/12/2004 01/01/2005 01/02/2005 01/03/2005 01/04/2005 01/05/2005 01/06/2005 01/07/2005 01/08/2005 01/09/2005 01/10/2005 01/11/2005 01/12/2005 01/01/2006 01/02/2006 01/03/2006 01/04/2006 01/05/2006 01/06/2006 01/07/2006 01/08/2006 01/09/2006 01/10/2006 01/11/2006 01/12/2006 01/01/2007 01/02/2007 01/03/2007 01/04/2007
$ 10.43 286.43 286.829.43 286.43 286.42 571.37 8.43 286.43 286.64 283.64 3.400.43
$

$ 286.43 286.26 8.69 8.85 6.556.43 286.14 11.708.93 4.70 8.16 282.67 5.68 1.838.282.20 275.00 1.48 2.43 286.646.182.03 9.47 285.40 2.730.829.20 4.708.29 280.918.80 6.92 7.05 12.93 4.60 6.140.43 286.991.43 286.352.44 5.43 286.21 270.52 285.43 278.43 286.43 285.43 286.43 286.97 278.84 9.43 286.43 286.680.796.66 276.991.38 8.43 286.43 286.239.00
2.43 286.33
Anil Chaudhry
Pm tNo .43 286.43 0.05 284.43 286.76 270.30 9.733.38 273.074.189.96 4.556.733.83 280.43 286.119.43 286.43 286.239.43 286.374.85 6.00 % 3
Loan Summary Scheduled Payment Scheduled Number of Payments Actual Number of Payments Total Early Payments Total Interest
$ 286.22 7.95 0.22 7.43 286.43 286.09 7.47 272.48 2.730.16 3.80 6.43 286.838.28 3.43 286.40 2.28 3.32 1.77 15.518.29 274.83 274.43 286.43 286.460.43 286.50 13.43 286.53 7.12 276.05 6.99 7.58 284.22 10.007.400.24 9.92 7.79 3.518.32 2.48
$ 9.89 279.67 16.43 286.23 281.43 286.42 285.32 1.95
$ 269.16 3.07 6.95 0.18 2.960.43 286.85 2.629.555.45 3.00 285.43 286.43 286.43 286.374.43 286.282.36 279.119.274.46 7.007.59 12.43 286.44 5.43 286.43 286.43 286.13 5.30 7.01 272.86 14.43 286.43 286.140.182.43 286.73 4.906.32 14.274.00 1.42 285.Loan Calculator
Enter Values Loan Amount Annual Interest Rate Loan Period in Years Number of Payments Per Year Start Date of Loan Optional Extra Payments Lender Name: $10.41 13.75 275.189.43 286.646.95 856.43 286.09 7.53 4.06 5.05 6.555.457.76 281.43 286.37 8.352.96 13.906.57 1.70 282.66 271.43 286.796.22 15.18 2.26 8.43 286.680.42 571.68 11.102.68 1.00
.43 286.000.43 286.92 273.03 9.460.43
36 36
12 01/04/2004
$

$ 311.425.960.43 286.43 286.48 5.00 9.43 286.30 7.04 277.074.48 5.43 286.56 272.918.53 4.
29 : : : : Answer shall be 16. you may enter any particular month Enter 25 Press exe.Operation
Finding the breakup of any PMT for any month shall be difficult task. payments in a year 12 press exe. the interest % 10000 press exe. but should be greater than PM1 36 press exe.666 Answer shall be 269. 4. however the same shall be quite easy in FC200. (3 years and 12 months in a year) 2 press exe. you may enter any particular month.70
₄ ₃ ₂ ₁
∑ ∑
. the principal amount enter 286. please refer the table The answer pertains to the interest component in the first installment (PM1) please refer the table The answer pertains to the principal component in the first installment (PM1) please refer the table The answer pertains to the total interest paid from 1st to 25th installment please refer the table The answer pertains to the total principal paid from 1st to 25th installment please refer the table
The simulation from any installment to any installment is possible.43 press exe.
The answer pertains to the principal balance after 25th installment.04
1. see the steps Press AMRT key Set PM1 PM2 N I% PV PMT FV P/Y C/Y BAL INT PRN INT PRN : : : : : : : : : : : End key Enter 1 press exe. the PMT can be worked out by using CMPD key 0 press exe. 2. should be left blank 12 press exe. Note : for going back to default input screen use ESC key
₅
Answer shall be 6880. compounding in a year SOLVE key : Answer shall be 3119.76
: SOLVE Key : SOLVE Key : SOLVE key : SOLVE Key
Answer shall be 280. 3. 5. quite simple way.
July 30. 2005 press SOLVE key and the answer shall be 291 days
By leaving any one variable blank and filling the other two variables. the same can be selected in setup key
Operation
Let us see the practical aspect of the same Press DAYS key and using the scroll key enter the following Set D1 D2 Dys : : : : 365 30072004 i.Day or date calculation
Explanation
The day’s mode helps you to calculate the number of days from any specific date to any specific date. 2004 17052005 i. The following simulation is possible If days and d1 is known then d2 can be calculated If days and d2 is known then d1 can be calculated If d1 and d2 is known then days can be calculated d1 is the first date and d2 is the date after the d1
D1
Days
D2
Before entering the data following options are available The option of setting the day as 360 or 365 is available Mode of entering the date as DMY or MDY.e. May 17. we can find the third variable.
.e.
. Last Year = 1 Sumof –years (PS)
For our example. N=5 and the sum of years is 1+2+3+4+5=15
Declining method or WDV Depreciation in First year = (P) x Depreciation rate Second year and onwards= (Net book value) x Depreciation rate Net book Value = (PSAccumulated depreciation) Depreciation rate =
. Straight Line Method (SL) Fixed Percentage Method (FP) Sum of Years Digit Method (SYD) Declining Method or written Down Value Method (WDV)
Straight Line Method= (PS)/n
P= Principal Value S=Salvage value if any N=Number of years
Fixed Percentage Method = (PS) x FP
P= Principal Value S=Salvage value if any N=Number of years
Sum of years Digit Method First Year = N Sumof –years (PS)
Second Year
=
N1 Sumof –years N2 Sumof –years
(PS)
Third Year
=
(PS)
.Depreciation calculation
Explanation
With the help of FC200 we can calculate the following four popular method of calculating the depreciation on fixed assets: Depreciation means wear and tear of the assets due to its usage.
42 =1
RDV means the value after depreciation
RDV means the value after depreciation
DB DB RDV ‘j
= SOLVE Key = 4000 = 8000 =1
RDV means the value after depreciation
Don’t forget to change the I%=as factor instead of Fixed percentage
With the help of FC200V the calculation for any year’s depreciation is possible also the factor for
.Operation
The following setting values should be done (hypothetical values) Press DEPR key and using the scroll key and EXE key press following values N I% PV FV ‘j YR1 = = = = = = = 6 25 200 12000 0 1 12 (life of assets in terms of years) (fixed rate of depreciation incase of Fixed percentage method) (depreciation factor in case of Declining Method) (Cost of the assets) (residual value if any) (year for which the depreciation is being calculated) (number of months in the first year)*
*In the initial year of buying the assets it is quite possible that depreciation is allowed only for part of the year in that case required number of months need to be entered. You need to input I% only if you use FP or DB method of depreciation
SL SL RDV ‘j
= SOLVE Key = 2000 = 10000 =1
RDV means the value after depreciation
FP FP RDV ‘j
= SOLVE Key = 3000 = 9000 =1
SYD SYD RDV ‘j
= SOLVE Key = 3428.57 = 8571.
This tool is very important for Managers as it suggest that company to break even must sell at least N number of quantities. quantities (QBE) 2.Break even point analysis
Explanation
This is a very common term used often by Finance Manager or Production Manager. Sales (SBE)
. a point of sales or a point of quantities to sell where the company would break even or to ore specifically company would neither gain nor lose. r% or
Beven press exe key and using again exe key select any of the following 1. Let’s see the calculation of Break even (quantities) Break even (quantities) =Fixed Cost / (Selling Price (Unit) – Variable Cost (Unit) )
Break Even (Values)
=
Break even (quantities) x Selling price
(Unit)
For calculating the BE we need selling price per unit (PRC). Fixed Cost (FC) Using the FC200V Press BEVN key and using the scroll key enter the following values Press exe key at BEV and input the following Hypothetical data Set : PRF / Quantities using exe key use appropriate options PRF / ratio press exe key using again exe key select ant of the following 1. The profit at such sales would become Nil or 0%. variable cost per unit (VCU). PRF 2.
the larger the increase in profits as sales rise and the larger the increase in loss as sales fall.60. then after selecting r% above enter the PRF / r% as 10 and then QBE and SBE can be calculated for a profit target of 10%.5
. That denotes that sales from the present levels can be dropped by 60% before company starts incurring losses. = Sales less Variable cost / sales less total cost Degree of operating leverage can be calculated if we know the total sales.Operation
Using Exe key enter following
PRC = VCU = FC = PRF/ R%= QBE = shall be 48000
100 75 12000 0* SOLVE key i. then after selecting PRF above enter the PRF / r% as 10000 and then QBE and SBE can be calculated for a profit target of 10000 * the option can be used if company wants to know that how much quantities need to be sold for achieving the profit % of say 10%. Input the sales SAL VC FC DOL press solve key : : : : 120000 90000 10000 1. Continuing from the last hypothetical figures where the SBE was 48000 and suppose the actual sales are 120000 that means the actual sales are more than the Break even sales of 48000. Margin of Safety (MOS) Margin of safety denotes that how much sales can be dropped before attaining the losses.e. For example if sales are 120000 and SBE is 48000 then MOS shall be 0. often associated with fixed assets).e 480 units or if SBE selected above then answer
*In case the company wants to know how much quantities need to be sold for achieving the profit (PRF) of say 10000." The greater the use of operating leverage (fixed costs. total variable cost and the total Press Exe key on DOL fixed cost.60
By inputting any two values third value can be calculated DEGREE OF OPERATING LEVERAGE (DOL) The extent to which a business uses fixed costs (compared to variable costs) in its operations is referred to as "operating leverage. I. Margin of safety is 60% Press Exe key on MOS Input the sales SAL SBE MOS : : : 120000 48000 0.
43. is 1.
Press Exe key on DCL SAL (total sales) VC (Variable cost) FC (Fixed Cost) ITR (Interest) DCL press Solve :120000 : 90000 : 10000 : 9000 : 2. 2. and is calculated as follows: DFL = Percentage change in EPS divided by Percentage change in EBIT This calculation produces an index number which if. Degree of total leverage measures the percentage change in EPS that results from a change in one percent in output. DFL=degree of financial leverage.7272
. That is: DTL=DOL*DFL Where: DTL=degree of total leverage.081
DEGREE OF COMBINED LEVERAGE (DCL)
Combined leverage is the product of operating leverage and financial leverage. DOL=degree of operating leverage. It assists in measuring the firm’s total risk. for example.DEGREE OF FINANCIAL LEVERAGE (DFL) The degree of financial leverage (DFL) is defined as the percentage change in earnings per share [EPS] that results from a given percentage change in earnings before interest and taxes (EBIT). Application of total leverage
1. means that a 100 percent increase in EBIT would result in a 143 percent increase in earnings per share In simple terms the DFL means the impact of Interest expenses on the earnings of the company Press Exe key on DFL EIT (earnings before Interest) :120000 ITR (Interest) : 9000 DFL press solve key : 1.
In more common terminology we can say that it measures the variability from the mean.
2 σ
= Population Variance = Mean
. we must understand the term Mean and Variance Mean as a common meaning denotes the center and arithmetically represents the average of the given population or sample data Variance is a parameter that measures how dispersed a random variable’s probability distribution is. Variance can be of two types: • • Population variance Sample Variance
High vs. For two random variables the one on the left is more dispersed than the one on the right. It has a higher variance. Low Variance
Example of Population variance The population variance is the mean squared deviation from the population mean: Here is an example of the variance formula in action.Statistical analysis
Before understanding the concept of Standard deviation.
1/X : exe : exe : exe : exe : exe : exe : exe : exe
.In X 5.a + b^X 7. This referred to as sample variance Sample variance can be calculated in the similar way as Population variance except that the divisional factor is one number less than the total numbers i.Var 2. An analogous measure of variability may be determined with sample data.a +X^B 8._ + cX2 4.Example of Sample variance In practice population variance cannot be computed directly because the entire population is not ordinarily observed.e N
N
∑ (x
s =
2 i =1
i
− x)
n −1
2 S X
= Sample variance = = Sample mean data
(σ − 1)2
Standard Deviation The standard deviation is the positive square root of the variance: Population standard deviation:
σ = σ2
Sample standard deviation:
σ − 1 = (σ − 1) 2
Let us take the an example having one variable and calculate above said Press Setup key and using the scroll key STAT: On/Off key Select On by pressing EXE Press STAT key and select type 1.A + B X 3.e^X 6.1.
MinMax
Press 1 we get the table __ above Press 2 we get the option of more data entry Press 3 we get the option of editing the data Press 4 we get the option of 1. ∑ x2 2. Var 2.Example for 1. ∑ x Press 1 and below screen appears Sum of variable ∑ x ∑ x2
∑ x2
0
Press Exe
2340
Please note for all calculation Press AC key and Shift – Smenu key and then press the required option
Press 2
and below screen appears
∑x
∑x
0
Press exe
150
. Type 3.Var (single variable) Press Stat and chose option from type 1var by pressing exe key and enter the following data using cursor and exe key X 1 2 3 4 5 6 7 8 9 10 10 12 14 16 18 20 18 16 14 12 freq 1 1 1 1 1 1 1 1 1 1
Press AC key and Shift SMenu and by selecting the appropriate digit following options available 1. Data 4. Edit 5. Sum 6.
option 4
0
Press exe
Press AC – Shift – SMenu.option 3
0
Press exe
Press AC – Shift – SMenu. we get the following screen
Press 1: n Press exe Press exe n
Press AC – Shift – SMenu.we get options of 1: minX and maxX Press 1 minX minX
0
Press exe
σ
X n1
X n1 3.6.5.option 2 X X
Press AC – Shift – SMenu.Press ACShiftSMenu and option 5.162277
σ
X n
σ
1: n 3: X n
2: X 4: x n1
σ
0
10
0
Press exe
15
X n 3
σ σ
10
.5.5.
6.
∑
n
∑
σ=
X (
X) /n
******
.we get options of 2
maxX
maxX
0
Press exe
20
In case of two variables the frequency column is used for another variable and the calculation is based on the following formula and the formula shall be based on the following shortcut of variance and Standard Deviation.Press AC – Shift – SMenu.
e.Commands when linear regression calculation (A+ BX) is selected When linear regression calculation is selected the calculation is performed by the following model is selected i. a + b X and the calculation are done based on the following:
.
Using FC200V following calculation is possible Steps in case of 1variable Shift Shift Shift Shift Shift Shift Shift Shift (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) 5Var 5Var 4sum 4sum 5Var 5Var 1 2 2 1 3 4 1 2 Formula ‘n X ∑x ∑X Xσn xσn1 MinX MaxX Formula ∑y ∑y ∑ xy ∑X y ∑X ∑X Ӯ Yσn yσn1 3 4 MinY MaxY A B Details Number of variables Mean of the variables (x data) Sum of the variables (x data) Sum of squares of variables ( x data) Population standard deviation (x data) Sample standard deviation (x data) Minimum of x values Maximum of x values Details Mean of the variables ( y data) Sum of squares of variables ( y data) Sum of products of x data and y data Sum of x2 data X y data Sum of cubes of x data Sum of bisquares of x data Mean of variables (y data) Population standard deviation (y data) Sample standard deviation (y data) Minimum if y values Maximum of y values Regression coefficient constant term A Regression coefficient term b Correlation coefficient r Estimated value of X Estimated value of Y
6MinMax 6MinMax
Steps in case of more than 1 variable. in addition to above Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) 4sum 4sum 4sum 4sum 4sum 4sum 5Var 5Var 5Var 4 3 5 7 6 8 5 6 7
6MinMax 6MinMax 7Reg 7Reg 7Reg 7Reg 7Reg 1 2 3 4 5
^Y ^X r‘
.
291287 2.5 44 284 2.449489 2 9 124 1964 724 4864 2024 15332 15.Example in the case of A+BX
X Y
2 12
3 13
4 14
5 15
6 16
7 17
8 18
9 19
Steps in case of 1variable Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) 5Var 5Var 4sum 4sum 5Var 5Var 1 2 2 1 3 4 1 2
Formula ‘n X ∑x ∑X Xσn xσn1 MinX MaxX ∑y ∑y ∑ xy ∑X y ∑X ∑X Ӯ Yσn yσn1 3 4 MinY MaxY A B
Result 8 5.291287 2.449489 12 19 10 1 1 Estimated value y=3 x^=7 Estimated value x=3 y^=13
6MinMax 6MinMax 4sum 4sum 4sum 4sum 4sum 4sum 5Var 5Var 5Var 4 3 5 7 6 8 5 6 7
6MinMax 6MinMax 7Reg 7Reg 7Reg 7Reg 7Reg 1 2 3 4 5
^Y ^X r‘
.5 2.
Exponential Regression (e^X). Model equation y= A+BX+CX
2. model equation y= Ae
BX
. Quadratic Regression (_CX ).
Logarithmic Regression (In X).Commands when other types of Regression calculation(s) are selected 1. model equation y= A+BInX
3.
Model equation y= A+B/X
.
Power Regression (A*X^B).4.
Inverse Regression (1/X). model equation y= AXB
5.
70833333 0.338539126 3 19 1.25
6MinMax 6MinMax 4sum 4sum 4sum 4sum 4sum 4sum 5Var 5Var 5Var 4 3 5 7 6 8 5 6 7
6MinMax 6MinMax 7Reg 7Reg 7Reg 7Reg 7Reg 7Reg 1 2 3 4 5 6
^Y 2^x ^X C
.6815416 If X=2 then y^= 3.02083333 If Y=3 then X^1= 1.582575695 4.68154169 If Y=3 then X^2= 35.25 4.Example in case of quadratic regression equation
X Y
2 3
4 5
6 7
8 9
10 11
12 13
14 15
16 19
COMMANDS Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) 5Var 5Var 4sum 4sum 5Var 5Var 1 2 2 1 3 4 1 2
Formula ‘n X ∑x ∑X Xσn xσn1 MinX MaxX ∑y ∑y ∑ xy ∑X y ∑X ∑X Ӯ Yσn yσn1 3 4 MinY MaxY A B
Result 8 9 72 816 4.898979486 2 16 82 1040 920 11696 10368 140352 10.993746089 5.75 0.
model equation y= A+BInX
X Y
2 3
4 5
6 7
8 9
10 11
12 13
14 15
16 19
COMMANDS Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) 5Var 5Var 4sum 4sum 5Var 5Var 1 2 2 1 3 4 1 2
Formula ‘n X ∑x ∑X Xσn xσn1 MinX MaxX ∑y ∑y ∑ xy ∑X y ∑X ∑X Ӯ Yσn yσn1 3 4 MinY MaxY A B
Result 8 9 72 816 4.338539126 3 19 4.106502688 7.25 4.9370197279 If Y=3 then X^= 2.111677003 0.71630479 If x=3 then y^= 3.898979486 2 16 82 1040 920 11696 10368 140352 10.706473061
6MinMax 6MinMax 4sum 4sum 4sum 4sum 4sum 4sum 5Var 5Var 5Var 4 3 5 7 6 8 5 6 7
6MinMax 6MinMax 7Reg 7Reg 7Reg 7Reg 7Reg 1 2 3 4 5
^Y ^X r
.Example in the case of Logarithmic Regression (In X).582575695 4.993746089 5.
338539126 3 19 2.964238069 0.898979486 2 16 82 1040 920 11696 10368 140352 10.9778589787 If Y=3 then X^= 0.1218549797 0.582575695 4. model equation y= Ae
BX
X Y
2 3
4 5
6 7
8 9
10 11
12 13
14 15
16 19
COMMANDS Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) 5Var 5Var 4sum 4sum 5Var 5Var 1 2 2 1 3 4 1 2
Formula ‘n X ∑x ∑X Xσn xσn1 MinX MaxX ∑y ∑y ∑ xy ∑X y ∑X ∑X Ӯ Yσn yσn1 3 4 MinY MaxY A B
Result 8 9 72 816 4.27243945
6MinMax 6MinMax 4sum 4sum 4sum 4sum 4sum 4sum 5Var 5Var 5Var 4 3 5 7 6 8 5 6 7
6MinMax 6MinMax 7Reg 7Reg 7Reg 7Reg 7Reg 1 2 3 4 5
^Y ^X r
.Example in the case of Exponential Regression (e^X).993746089 5.25 4.098414231 If x=3 then y^= 4.
098414231 If x=3 then y^= 4. model equation ABX y=
X Y
2 3
4 5
6 7
8 9
10 11
12 13
14 15
16 19
COMMANDS Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) 5Var 5Var 4sum 4sum 5Var 5Var 1 2 2 1 3 4 1 2
Formula ‘n X ∑x ∑ X Xσn xσn1 MinX MaxX ∑y ∑y ∑ xy ∑y X ∑ X ∑ X Ӯ Yσn yσn1 3 4 MinY MaxY A B
Result 8 9 72 816 4.129590276 0.338539126 3 19 2.9778589787 If Y=3 then X^= 0.27243945
6MinMax 6MinMax 4sum 4sum 4sum 4sum 4sum 4sum 5Var 5Var 5Var 4 3 5 7 6 8 5 6 7
6MinMax 6MinMax 7Reg 7Reg 7Reg 7Reg 7Reg 1 2 3 4 5
^Y ^X r
.Example in the case of ab Exponential Power Regression (A*b^x).582575695 4.993746089 5.964238069 1.25 4.898979486 2 16 82 1040 920 11696 10368 140352 10.
550191285 0.14647453 If x=3 then y^= 4.582575695 4.25 4. model equation y=
AXB
X Y
2 3
4 5
6 7
8 9
10 11
12 13
14 15
16 19
COMMANDS Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) 5Var 5Var 4sum 4sum 5Var 5Var 1 2 2 1 3 4 1 2
Formula ‘n X ∑x ∑ X Xσn xσn1 MinX MaxX ∑y ∑y ∑ xy ∑y X ∑ X ∑ X Ӯ Yσn yσn1 3 4 MinY MaxY A B
Result 8 9 72 816 4.Example in the case of Power Regression (A*x^b).898979486 2 16 82 1040 920 11696 10368 140352 10.338539126 3 19 1.993746089 5.006800639
6MinMax 6MinMax 4sum 4sum 4sum 4sum 4sum 4sum 5Var 5Var 5Var 4 3 5 7 6 8 5 6 7
6MinMax 6MinMax 7Reg 7Reg 7Reg 7Reg 7Reg 1 2 3 4 5
^Y ^X r
.9959314857 If Y=3 then X^= 2.8643765905 0.
2498118 29.898979486 2 16 82 1040 920 11696 10368 140352 10.25 4.338539126 3 19 15.438529776
6MinMax 6MinMax 4sum 4sum 4sum 4sum 4sum 4sum 5Var 5Var 5Var 4 3 5 7 6 8 5 6 7
6MinMax 6MinMax 7Reg 7Reg 7Reg 7Reg 7Reg 1 2 3 4 5
^X r
Ŷ
.582575695 4.Example in the case of Inverse Regression (1/X).993746089 5.402799859 If x=3 then Ŷ= 5.8098270919 If Y=3 then X^= 2. Model equation y= A+B/X X Y 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 19
COMMANDS Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift Shift (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) (Smenu) 5Var 5Var 4sum 4sum 5Var 5Var 1 2 2 1 3 4 1 2
Formula ‘n X ∑x ∑ X Xσn xσn1 MinX MaxX ∑y ∑y ∑ xy ∑y X ∑ X ∑ X Ӯ Yσn yσn1 3 4 MinY MaxY A B
Result 8 9 72 816 4.43384607 0.
25% we get the net present value as 0.78353) =1. using a discount factor of 5%. 2nd Year)+CF2(5%. it can be either Fixed or can be derived from two dates Yield = YLD = the effective rate of interest or YTM.9523)+(4*0. 3rd Year)+CF3(5%.90702)+(4*0.16% where the discounted cash flows shall be nearly equal to Zero.
Example
A bond sold in the market at discount of 5% (face value100. 5th Year)=0
= (95*0. 4th year)+CF5(5%. we get following
CF0(5%.39 Similarly using the Discount factor at 5. coupon rate4%) and has a term period of 5 years.
.86384)+(4*0.g.374649 To be more precise the YTM shall be 5. e. Coupon Rate = CPN = rate of interest payable on the face value of the Bonds Purchase price = PRC = Price at which these bonds are available in the market
Redemption value = RDV = Price at which maturity value is paid back to bondholders Term = n = Period of the bond.82270)+(104*0. Find out its effective return? An investor to this Bond shall enjoy following benefits Period Year Year Year Year Year Year 0 1 2 3 4 5 Cash flow 95 04 04 04 04 104*
(*Investor would get the Principal amount also in addition to Interest)
Equate the present value of all Cash flows to Zero and using the trial and error method find out its Yield.Bond (Annualized Yield or Yield to Maturity)
The customary way of calculating the yield on Bonds purchased from the market is to typically finding the Internal Rate of Return (IRR) To understand Bond we must understand the complete terminology of the Bonds. 1st year)+CF1(5%.
Operation: Press BOND key and using scroll and exe key enter the following data: Bond Calc Set: Annual / Term* N= 5: Press exe RDV=100: press exe CPN= 4: Press exe PRC=95: press exe YLD=Solve key
YLD=5.03 in the market to get the yield of 8% in the bond the Interest accrued on such bond shall be zero and the purchase price including interest shall be 84.159986152
• • •
The interest option can be selected either Annual or Semi annual and also the period of bond can be either fixed or term Fixed period bonds shall give the option of putting two different dates as purchase date and maturity date Term period bond give the option of only putting the number of years as the life of the bond
If the Coupon rate is 4% and the Redemption price if 100 and to get the Yield of 8% what should be the purchase price of the bond in the market?
Bond Calc Set: Annual / Term* N= 5: Press exe RDV=100: press exe CPN= 4: Press exe PRC=Solve Key YLD=8: Press exe
PRC= 84.02915985 INT= 0 CST= =84.03 only
.02915985
The purchase price shall be 84.
these settings specifies whether Simple Interest (SI) or Compound Interest (CI) is to be used for partial months to change the settings
DN
DN: CI
Exe
1: CI 2: SI
Choose 2
DN: SI
4. the calculation of interest is dependant on the payment mode i. Begin 2. in advance (begin) or after the completion of month (end).e.
Payment Mode: Used in CMPD and AMRT Modes. for choosing the correct option following is the procedure: Press Setup key and using scroll key select the following menu Payment: End
Payment 1. End
Exe
Choose 1
Payment: Begin
2.
DN: Used in CMPD mode.Defining the setup keys
The initial setup for various key is as per following table and to change the settings value the procedure defined in the next pages shall be followed:
1. the days in the year can be 365 or 360 days depending upon the usage and practice. The settings can be configured as follows: Periods/Y: Annu
Periods/year 1 Annual 2 Semi
Exe
Choose 2
Date Mode: 365
.
Periods: Used in BOND mode . the bond can have the payment of interest either annually or semi annually. the same can changed as followed
Date Mode 1 360 2 365
Date Mode: 365
Exe
Choose 1
Date Mode: 360
3.
Date Mode: Used in SMPL. DAYS and BOND Modes. Year: Annual or Semi annual coupons payment per year.
used in the case BEVN mode only and the break even can be calculated either in term of quantity or Sales amount. Date in case of Bonds purchased the same can be either having a fixed term or two dates can specified. used in the case BEVN mode only. i. the dates can be input either of the following way. Sci and Norm modes are used in all modes and the calculations and are easy to understand and modify the initial settings.
Bond date: used in BOND mode only. Fix. Date of purchase and the date of maturity.
Date Input: MDY: used in case of DAYS and BOND mode only. Profit or profit percentage can be specified.e. as
Digit Separator : used in all modes and is an option used for making the digit appearing
123456 123456 123456
Superscript mode Subscript mode Separator Off
123’456 123. the initial settings can be modified as follows:
PRF/Ratio: PRF
Exe
PRF / Ratio 1 PRF 2 R%
Chose2
PRF/Ratio: r%
8.
.Even 1 Quantity 2 Sales
Chose2
BEven: Sales
9. the initial settings of MDY can be modified as follows:
Date Input: MDY
Exe
Date Input 1 MDY 2 DMY
Choose2
Date Mode: 365
7. The initial settings can be modified as follows:
Bond date: Date
Exe
Bond Date 3 Date 4 Term
Choose2
Bond Date: Term
6.456 123456
10
Angle.
BEven : Quantity.5. the initial settings of quantity can be modified as follows:
BEven: Quantity
Exe
B.
PRF/Ratio: PRF. Month/Day/Year (MDY) or Date/Month/Year (DMY).
used is STAT mode only and is an application which is used when the statistical calculations are to be performed then the stat mode can be turned on or off by following the following procedure
STAT: On
Exe
STAT 1.11.
On Off
Choose2
STAT: Off
.
Stat: on . 2.