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# calculator tutorial

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CALCULATOR TUTORIAL INTRODUCTION Because most students that use Understanding Healthcare Financial Management will be conducting time value analyses on spreadsheets, most of the text discussion focuses on spreadsheet solutions. Still, some students will be using calculators to solve time value problems. This tutorial, which focuses on calculator solutions, was prepared to assist those students. FUTURE VALUE OF A LUMP SUM (COMPOUNDING) The process of going from today's values, or present values, to future values is called compounding, and lump sum compounding deals with a single starting cash flow. Suppose that the manager of Meridian Clinic deposits \$100 in a bank account that pays 5 percent interest per year. How much would be in the account at the end of five years? Regular calculator solution: A regular (nonfinancial) calculator can be used, either by multiplying the PV by (1 + I) for N times or by using the exponential function to raise (1 + I) to the Nth power and then multiplying the result by the PV. The easiest way to find the future value of \$100 after five years when compounded at 5 percent is to enter \$100, then multiply this amount by 1.05 five times. If the calculator is set to display two decimal places, the answer would be \$127.63: 0 1 2 3 4 5 5% ...

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