Loans

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Exercises

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Key Skills

Positive & Negative Cash Flows (TVM)

SL Core 1.4

Whenever you use the Finance App (TVM Solver) on your calculator, it's critical that you enter and interpret the signs correctly:

When you receive money from a bank or savings account, that value is positive, because you're gaining money.

When you send money to a bank, that value is negative, because you're losing money.

Using TVM Solver (Calculator) - Loans

SL Core 1.4

In IB, loans are paid off at the end of a number of periods (N) and have an annual interest rate (I%), an initial balance (PV), a fixed payment (PMT), and an outstanding balance (FV). Payments per year and compounds per year typically occur at the same frequency (P/Y, C/Y).

You can use the TVM solver with loans to find any of those variables if you know all the others.

Positive & Negative Cash Flows (TVM)

SL Core 1.4

Whenever you use the Finance App (TVM Solver) on your calculator, it's critical that you enter and interpret the signs correctly:

When you receive money from a bank or savings account, that value is positive, because you're gaining money.

When you send money to a bank, that value is negative, because you're losing money.

Using TVM Solver (Calculator) - Loans

SL Core 1.4

In IB, loans are paid off at the end of a number of periods (N) and have an annual interest rate (I%), an initial balance (PV), a fixed payment (PMT), and an outstanding balance (FV). Payments per year and compounds per year typically occur at the same frequency (P/Y, C/Y).

You can use the TVM solver with loans to find any of those variables if you know all the others.