Page 94 - CalcBus_Flipbook

10-16 Credit CH 10]

In this equation there are several
parentheses, as such to solve it you begin
r with the inner most parentheses which is
Where to begin: Pmt = PV – n ( 1 + r ) and contains a negative exponent.
-n
Actually you will 1 – (1 + r) This means that the calculated value MUST
solve this type of be divided into 1 to change the exponent to a
problem by positive value.
beginning with the (0.055 ÷ 12)
denominator Pmt = PV – 180 The values for r and n are put in place in the
values. 1 – ( 1 + (0.055÷12) ) equation r = 0.055/12 = 0.004583 interest for
each month. However leave the arithmetic
And follow 0.55/12 in the numerator for later.
PEDMAS below. n = 15yrs x 12mo/yr = 180 months.
(0.055 ÷ 12)
Pmt = PV As the 1 and (0.055/12 =) 0.004583 are
1 – ( 1.004583 ) – 180 inside a parentheses this addition is

completed before the exponent value is
considered; (1 + 0.004583 =) 1.004583.
(0.055 ÷ 12) The exponent n, which has a value of
At this point the Pmt = PV 1 – ( 1.004583 ) – 6 x 6 x 5 -180 needs to be factored for your hand

equation algorithm calculator. The factor of 180 is 6 x 6 x 5,
becomes the B which equals 180, the exponent for this
equation above. problem.
(0.055 ÷ 12)
Pmt = PV Still inside this parenthesis the arithmetic of
1 multiplication of an exponent being completed
1 — yields an answer of 2.27744774257. This
–
(2.27744774257) value still needs to be divided into 1 to
remove the minus ( - ) exponent sign.

(0.055 ÷ 12)
Pmt = PV
1 The next element contains the fraction ( 1 ÷
Order of 1 — + 2.27744774257) raised to a negative exponent.
Operations: (2.27744774257) Perform the division. The resulting answer is
0.439088001124; and being divided into 1, the
PEMDAS exponent becomes a positive value. Next step

1. Parentheses. Pmt = PV (0.055 ÷ 12) is to subtract 0.439088001124 from 1.
2. Exponents and 1 – ( 0.439088001124 )
Roots √ Performing the subtraction as indicated yields
3. Multiplication (0.055 ÷ 12) that the denominator is now 0.56091198876.
and Division Pmt = PV
(from left to right) 0.56091198876 Putting in the value of the loan (PV) as $12,000, there is
4. Addition and division and multiplication to be performed. Start with
the division. Divide the r (monthly interest rate of 0.055 ÷
Subtraction (from 12 = 0.00445833) by the calculated denominator of
left to right) 0.0045833 0.56091198876. Perform this arithmetic left to right as
Pmt = $12,000 0.055 ÷ 12 ÷ 0.56091198876. This arithmetic yields a
0.56091198876 value of 0.00817115713. This new value will be
multiplied (x) by the loan amount of $12,000 to calculate
the monthly payment.

Pmt = $12,000 x 0.0081712115713
The arithmetic of multiplication ($12,000 x
0.0081712115713) gives the monthly payment ,

Pmt = 98.05388566 = $98.05
Monthly Payment
To calculate the Monthly Payment with your hand held calculator use these key strokes:
CL .055 ÷ 12 + 1 = M+
Exponent value of key strokes: 6 x 6 x 5

X = = = = = X = = = = = X = = = =

CM M+ 1 ÷ RM = CM M+ 1 − RM =
Rounded to $
CM M+ .055 ÷ 12 = ÷ RM X 12 0 0 0 = 98.05001448 $98.05

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