Compound interest using the CAS financial application
Most computer algebra system (CAS) calculators come with a built-in financial application which can be used to solve problems involving compound interest. These applications simply require you to enter in the known quantities (such as principal, interest, and number of compounding periods per year), and then the compound interest formula is applied or rearranged in the background to calculate the desired unknown quantity.
These financial applications typically use the following notation:
| $N$N | total number of payments |
| $I%$I% | interest rate as a percentage per annum |
| $PV$PV | the present value, or the principal |
| $PMT$PMT | the value of any additional regular payment |
| $FV$FV | the future value, or the final amount |
| $P/Y$P/Yor $PpY$PpY | number of payments per year |
| $C/Y$C/Y or $CpY$CpY | number of compounding periods per year |
Remember that if you enter a positive value for $PV$PV then the solver will return a negative value for $FV$FV. This corresponds to borrowing: when you borrow you have a positive present value (the bank gives you money) but in the future you owe money to the bank, which is what the negative number represents. Conversely if you enter a negative number for $PV$PV then the solver returns a positive $FV$FV - this corresponds to investing.
- Borrowing money - the bank is giving you money - use positive value for $PV$PV
- Investing money - you are giving your money to the bank - use negative value for $PV$PV
Another difference is that the solvers are set up to deal with regular payments in addition to the accumulation of interest. If there is no payment then we set $PMT$PMT to $0$0. We also set $P/Y=C/Y$P/Y=C/Y (the number of compounds per year) and then $N$N (number of payments of zero) is equal to the total number of compounding periods.
Select the brand of calculator you use below to view how the financial application appears in your calculator.
Casio Classpad
How to use the CASIO Classpad to complete the following tasks using the inbuilt financial solver.
Consider an investment of $\$2000$$2000 at $5%$5% p.a. compounded monthly.
Give your answers to two decimal places.
Find the value of the investment after $4$4 years.
Find the time required to earn $\$600$$600 in interest.
What rate would be required to reach a savings goal of $\$2600$$2600 within $4$4 years?
TI Nspire
How to use the TI Nspire to complete the following tasks using the inbuilt financial solver.
Consider an investment of $\$2000$$2000 at $5%$5% p.a. compounded monthly.
Give your answers to two decimal places.
Find the value of the investment after $4$4 years.
Find the time required to earn $\$600$$600 in interest.
What rate would be required to reach a savings goal of $\$2600$$2600 within $4$4 years?
Practice questions
Question 1
$\$13000$$13000 is borrowed at an interest rate of $2.7%$2.7% p.a. compounded semi-annually.
Use the finance application on your CAS calculator to find how much is owed after $4.5$4.5 years in dollars.
Round your answer to the nearest cent.
Question 2
Rosey borrows $\$13000$$13000 at an interest rate of $2.5%$2.5% p.a. compounded weekly.
If she makes no repayments, use the finance application on your CAS calculator to find the amount of interest that is owed after $3$3 years in dollars.
Round your answer to the nearest cent.
Assume there are $52$52 weeks in a year.