MBF3C – Personal Finance - Day 5 Handout and Worksheet

(TVM Solver)

TVM Solver: We can use the TVM Solver to solve for any variable in our
compound interest formula.

Before you begin, make sure the calculator is set to two decimal places.
To get to the TVM Solver press: [APPS]  [ENTER]  [ENTER]
The list of the variables and what each variable represents is below:

N = Number of years of investment

I% = Interest rate as a percent (not decimal)
PV = Principle (P)
PMT = Always set to 0.00
FV = Final amount or Future Value of investment (FV)
P/Y = Always set to 1
C/Y = Number of compounding periods per year

***For the solver to work, either PV or FV must be negative***

To solve for a variable, highlight the variable you are interested in then press:
[ALPHA]  [ENTER]

Use the TVM Solver to answer the following questions.

1. A deposit of $1550 will grow to $1680.20 in 2 years. What rate of interest is given if interest
is calculated:

a. Monthly?

b. Semi-annually?

2. How much money was invested at 6.5% compounded bi-weekly for 4 years if the final
amount of the investment was

a. $10,500?

b. $15,000?
3. Owen invested $3500 in a savings bond. After 2 years he cashed it in for $4235.45.

a. What was the rate of interest if it was compounded quarterly?

b. What was the rate of interest if it was compounded monthly?

c. What was the rate of interest if it was compounded weekly?

4. Approximately, how long would it take for a $25000 investment to double if it is

compounded semi-annually at the following interest rates?

a. 0.5%

b. 2%

c. 5.5%

d. 9%

e. 20%

5. Rochelle needs to have $3000 to buy a car. She can invest her savings in a GIC that pays
5.2% compounded monthly. How much does she need to invest now, if she waits the
following lengths of time?

a. 6 months

b. 1 year

c. 2 years

d. 5 years

e. 18 months