Most loans occur at the end of the period while most leases at the beginning. Finally, the "Interest per Year" is a percentage earned for allowing someone else to use your money, or the additional paid so you can borrow someone else's.

Example 1: Calculating mortgages
Often, a financial calculator is used to calculate loans. For example, let's say that you want to buy a home. You need to borrow $120,000 to purchase that dream home. The bank is offering an interest rate of 7.25% over 30 years. How much do you pay each month (not including taxes and other purchasing costs)?

Here are the various inputs:

• A mortgage, like other loans, occurs at the end of the month, so we set the Payment Timing to "END."
• The loan amount, or Present Value, is $120,000.
• At the end of the time period, we would have paid off the entire mortgage, so the Future Value should be 0.
• The Interest rate is 7.25% and Periods is set to 360 (30 years x 12 periods per year).
• We pay monthly, so Periods per Year and Compounding Periods per Year are 12.

To enter each of these values, we tap the solid-bordered label button and enter the value in the Input screen. To answer the question and calculate the Payment amount, we tap the dotted-bordered value button, which should give us an answer of $818.61. This value is negative because it is paid out of our pocket. Inflows of cash are positive values and outflows are negative for each of the three amount fields (present value, future value, and payment amount). See Figure C for a graphical display before and after calculating the answer.

FIGURE C

How much home can you afford?

Example 2: Investing for the Long Haul
Financial calculators are also often used for investment decisions and planning. Let's say that you have 30 ahead of you on the job before you plan to retire. Today, you have $15,000 in various savings, checking and investment vehicles and your would like to determine how much you would need to put aside each month to become a millionaire. You want to start investing today and have been told that you can find fairly risk-free investments for 10%.

A good financial calculator can help you determine this amount. Here's how you'd do it:

• Since you want to start investing today, you need to set the Payment Timing to "BEG."
• The Present Value is $15,000 and is entered as a negative number because you are depositing this in a bank (it's an outflow to the bank).
• Our Future Value is a positive $1,000,000 and the Interest per Year is 10%.
• Again, we are putting aide money each month for 30 years, making the Periods 360 and the Periods per Year and Compounding Periods per Year equal to 12.