Hp 20B User Manual download pdf (Page 30)

Time Value of Money

3 Time Value of Money

The examples in the following sections are calculated with the Mode menu preferences in their default settings, unless

otherwise noted. For more information about basic features and setting preferences, see Chapter 1

, Basic Features

Time Value of Money (TVM) Keys

Cash flow diagrams are useful tools for analyzing financial situations, as they help you identify the TVM functions needed to

resolve your problem.

A cash flow diagram is a drawing with a set of vertical arrows arranged on a horizontal line. The horizontal line represents the

period of time from the beginning of the financing to the end. The vertical arrows represent the money or cash flows at certain

times throughout the period. The arrows' length is proportional to the cash flow amount each arrow represents; a longer arrow

indicates a larger amount, a shorter arrow, a smaller amount. Each arrow's position on the line represents the time at which

the cash flow occurs. The orientation of the arrow, up or down, represents the "direction" of the cash flow: up for money

received, down for money paid out. See Figure 1.

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Hp 20B User Manual Page 30