Use the TVM Solver to Reach Financial Goals - dummies

Use the TVM Solver to Reach Financial Goals

You can use the The TVM (time-value-of-money) Solver on the TI-83 Plus graphing calculator to determine how long to leave money in a savings or investment account to reach a specified financial goal. Here are some pointers you may want to use:

• N (number of payments):

This is the variable you’re solving for. Assign values to all variables except N.

• PMT (amount of payment) and P/Y (payments per year):

If you put money into an account and just leave it there without adding to it, then PMT is 0. And because you’re not making any payments, you can set P/Y to 1. This will tell the calculator to evaluate N in years.

On the other hand, if you add to the account on a regular basis, then PMT is the value of these regular additions to the account and P/Y is the number of times a year these additions to the account are made. This is illustrated in the first picture.

In this picture, the TVM Solver is solving the question, ” If you invest \$50,000 now and then add \$1,000 to the account each month, how many years will it take for the account to reach \$1,000,000?”

• After you have solved for N:

If P/Y is 1, then the solution for N is in years. If P/Y isn’t 1, then N is the total number of payments made. Because P/Y payments are made each year, the number of years it takes to reach your financial goal is N divided by P/Y.