Financial Functions on the TI-89 Titanium

The TI-89 Titanium calculator offers a suite of powerful financial functions accessible through its "Finance" application. These functions are invaluable for students, finance professionals, and anyone needing to perform complex financial calculations quickly and accurately.

Accessing the Finance Application

To access the Finance application, press the APPS key, scroll down to "Finance...", and press ENTER. From there, you'll find several pre-programmed functions to perform different types of financial analysis.

Key Financial Functions

1. TVM Solver (Time Value of Money)

   The TVM Solver is the most frequently used tool. It allows you to solve for any one variable in the time value of money equation, given the other variables. The variables are:

   • N: Number of compounding periods.
   • I%: Interest rate per year (entered as a percentage, e.g., 5 for 5%).
   • PV: Present Value.
   • PMT: Payment per period.
   • FV: Future Value.
   • P/Y: Payments per year.
   • C/Y: Compounding periods per year.
   • PMT: BEGIN/END: Indicates whether payments are made at the beginning or end of the period.

   To use it, enter all known values, place the cursor on the variable you want to solve for, and press ALPHA followed by ENTER (which triggers the "SOLVE" command). Remember to pay attention to the sign conventions: cash inflows are positive, and cash outflows are negative.

2. Amortization

   The Amortization function lets you create an amortization schedule for a loan. It shows the principal and interest portions of each payment over a specified period. You need to input the same information as in the TVM solver (N, I%, PV, PMT, FV, P/Y, C/Y) along with the starting and ending payment numbers for the amortization schedule.

3. irr (Internal Rate of Return)

   The `irr` function calculates the internal rate of return for a series of cash flows. The syntax is `irr(CF0, CFList, {CFFreq})`, where CF0 is the initial investment (usually a negative value), CFList is a list containing the subsequent cash flows, and CFFreq (optional) is a list specifying the frequency of each cash flow.

4. npv (Net Present Value)

   The `npv` function calculates the net present value of a series of cash flows, discounted at a given interest rate. The syntax is `npv(Interest Rate, CF0, CFList, {CFFreq})`, where Interest Rate is the discount rate, CF0 is the initial investment, CFList is a list containing the subsequent cash flows, and CFFreq (optional) is a list specifying the frequency of each cash flow.

5. MIRR (Modified Internal Rate of Return)

   The `MIRR` function calculates the modified internal rate of return which accounts for both the cost of borrowing and the return on reinvestment. The syntax is `MIRR(Finance Rate, Reinvest Rate, CF0, CFList)`.

Important Considerations

• Sign Conventions: Be consistent with sign conventions. Cash inflows are typically positive, and cash outflows are negative.
• Compounding Periods: Ensure that the interest rate (I%) and the number of compounding periods (N) are consistent. If interest is compounded monthly, N should be the total number of months, and I% should be the annual interest rate divided by 12.

By understanding and effectively utilizing the TI-89 Titanium's financial functions, you can solve a wide range of financial problems with ease and accuracy.