ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Completing Amortization Problems With a TI BaII+ Calculator

Updated on December 3, 2019
THEAMAZINGJAMES profile image

James likes to learn about technology and share what he learns through his articles.

TI BAII+ Calculator

The TI BAII+ calculator has many features for use in business. This calculator allows one to compute time value of money calculations, analyze Cash flows, create amortization schedules, compute the net present value, as well as other functionalities
The TI BAII+ calculator has many features for use in business. This calculator allows one to compute time value of money calculations, analyze Cash flows, create amortization schedules, compute the net present value, as well as other functionalities

Solving Amortization Problems

Having accurate and all the necessary data is key to solving amortization problems. This type of problem is simplified when using a calculator. Completing amortization manually requires a lot of effort to organize data into a table. This time-consuming task is can be reduced to a few minutes with a trusty TI calculator. As long as you have the relevant data needed at your fingertips, using the TI BAII+ calculator to amortize is simple. If following along with your calculator, be sure to set your calculator to annual interest before proceeding with this tutorial.

Locating the Right Buttons

This illustration above shows the time value of money keys in the third row down from the top on a TI BAII+ calculator. These keys can compute interest, the number of years to accrue, present values, future values and payments.
This illustration above shows the time value of money keys in the third row down from the top on a TI BAII+ calculator. These keys can compute interest, the number of years to accrue, present values, future values and payments.

Amortization Sample Problem

Take note to the buttons that have a red rectangle around them in the above illustration. These are the buttons utilized to make an amortization calculation. Let’s look at an example to figure out the exact steps that need to be made to compute a simple amortization problem.

If you decide that you want to borrow $100,000 that requires annual payments for 3 years and an interest rate of 7%, how much interest do you pay in year 2?

Clearing the calculator is the first step that needs to be taken before starting the problem. To do so you need to press the 2cd key first, then press the CLR TVM key.

Entering Data Into the Calculator

To compute this problem each of the following steps need to be followed to enter data into the calculator:

Step 1. Key in the number 3, then key "N" (This means that three payment periods are set)

Step 2. Key in the number 7, then key "I/YR" (It is not necessary to input the percent symbol)

Step 3. Key in 100,000, then key "PV" (This number is positive because it is a cash inflow or cash received)

Step 4. Key in the number 0, then key "FV" (This step is not necessary if the calculator was cleared before the problem was started)

After keying all data into N, I/YR, PV, and FV, the data is saved and the calculator is waiting for further instructions.

Displaying the Data

Now that all the relevant data is entered the fixed payment can be computed. This can be accomplished by pressing the CPT key, followed by the pressing the "PMT" key. The calculator will display -38,105.17. The number will be negative since it is representing a cash outflow. This number can be stated as the annual payment made to be able to borrow the money.

The fixed payment is good to know, but we really need to know what the interest payment will be in year number 2. To see these details, the 2cd key must be pressed, followed by pressing the “AMORT” key. The calculator now displays “P1 =" and have a number to the right of the screen. To show data for the first period key in 1, followed by pressing the enter key. Now the down arrow key must be pressed to set P2 to 1. Key the down arrow key again to cycle through the first period data. The data for the first period is:

  • First Period Principle -31,105.17
  • First Period Interest -7,000.00
  • First Period Balance 68,894.83

That gets period one out of the way, but we are more interested in the second period. To get to the second period, press the down key to navigate to P1 and P2. Set both of these to 2. At this point you can cycle through data for the second period. The data relating to the second period is shown below:

  • Second Period Principle -33.282.53
  • Second Period Interest -4,822.64
  • Second Period Balance 35,612.31

The answer to the problem is $4,822.64. This dollar amount is the interest paid in year 2 and is negative in the calculator because it is a negative cash flow. Even though this is represented as a negative in the calculator the answer must reflect a positive number. Additionally, to see data for the third period the P1 and P2 will need to be set to 3.

The illustration below is an amortization table that was created in Microsoft Excel. Just to show you how much time can be saved by amortizing with a calculator, the table took me about 7 minutes to create by hand while calculating all the data with a calculator took about 3 minutes.

Amortization Table Example

The illustration here shows a completed amortization table for the problem. The table is easy to fill out, but required more time to create when the time value of money calculator function is not utilized.
The illustration here shows a completed amortization table for the problem. The table is easy to fill out, but required more time to create when the time value of money calculator function is not utilized.

Amortization Monthly Payment Example

In the previous example annual payments were made. Let’s see how to amortize on a TI BaII+ calculator if the payments are monthly. Using the same example, let’s assume payments are monthly. In this case, the number of periods and periodic rate must be calculated.

To adjust for monthly payments, 3 would need to be multiplied by 12 (the number of periods in a year) to find the 36 payments representing “N”.

Since 36 payments will be made in 3 years, the payment should be smaller. To find the interest rate, the interest of 7% must be divided by 12 (the number of periods in a year) which is .58333. The specific steps for data entry can be seen below:

  • Step 1. Multiply 3 times 12 and key the = sign, press the "N" key
  • Step 2. Divide 7 by 12 and key the = sign, press the "I/YR" key
  • Step 3. Key in the number 100,000, press the "PV" key
  • Step 4. Key the number 0, press the "FV" key

After all this data is entered the "CPT" key can be pressed. Next, the "PMT" Key can be pressed. This will retrieve the value for the payment. The payment result is -3,087.71 and the interest payment for the second period is $568.72.

Amortization Quarterly Payment Example

To adjust for quarterly payments, 3 would need to be multiplied by 4 (the number of periods in a year) to find the 12 payments representing “N”.

Since 12 payments will be made in 3 years, the payment should yet again be smaller than annual payments in the original problem. To find the interest rate, the interest of 7% must be divided by 4 (the number of periods in a year) which is 1.75. The specific steps for data entry can be seen below:

Step 1. Multiply 3 times 4 and key the = sign, press the "N" key

Step 2. Divide 7 by 4 and key the = sign, press the "I/YR" key

Step 3. Key in the number 100,000, press the "PV" key

Step 4. Key the number 0, press the "FV" key

After all this data is entered the "CPT" key can be pressed. Next, the "PMT" Key can be pressed. This will retrieve the value for the payment. The payment result is -9,311.38 and the interest payment for the second period is $1,617.68.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2019 James Smith

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://maven.io/company/pages/privacy

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)