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******* NOTE: The HP calculators come from the factory with the PMTS/YR set to 12. Change this setting to 1 PMT/YR by going to #6 below. Change this setting before you do any of the time value of money problems!!!! You only have to change the PMT/YR setting one time! ********* GENERAL: Note that every HP-10BII calculator key has two functions, the main ones are in WHITE LETTERS and a second function in ORANGE. To access the second function, you simply enter the ORANGE key first, and then press the key to access the function in ORANGE. There is also a PURPLE button, which accesses some statistical functions that we will not be using in this class. In the examples below, the slash symbol: / is used to separate keystrokes 1. SETTING THE NUMBER OF DECIMAL PLACES:

Orange Key / = Key (DISP) / Number of desired decimal places Examples:

Orange Key / = / 2 (to set display to two places, good for bond prices, e.g. $975.42) Orange Key / = / 4 (to set display to four places, good for ex-rates, e.g. $1.5074 / £) NOTE: Setting to two decimal places is not appropriate when calculating answers involving certain percentages or interest rates. For example, suppose your answer is an interest rate: .0851, or 8.51%. If your calculator is set to two decimal places, it will round your answer to .09 or 9%, which is almost .5% away from 8.51%. Be sure in this case that you set your calculator to display three or four decimal places, since 9% would not qualify for full credit when the true answer is 8.51%!! With experience, you will get used to changing the decimal display to the appropriate setting, based on the problem.

2. CLEARING THE CALCULATOR

To clear the calculator display (screen) only, use the C key (bottom left corner). This will NOT clear any of the financial registers, memory registers, or statistical registers. To clear EVERYTHING (all registers), Enter the ORANGE KEY and then the C key to access the "C ALL" function.

3. PERCENTAGE CHANGE:

General format: A variable goes from X1 to X2, what is the percentage change in X? First number (X1) / INPUT / Second Number (X2) / Orange Key / % Key (to access %CHG)

Example: Find the inflation rate if the Consumer Price Index goes from 114 to 120: Solution: 114 / INPUT / 120 / Orange Key / % (Answer: 5.26%)

Example: Real GDP goes from $8800B to $9200B, what is the growth rate of real output? Solution: 8800 / Input / 9200 / Orange Key / % (Answer: 4.55%)

Example: If the $/£ rate goes from $1.80 to $1.90, what is the percentage change in the UK pound? Solution: 1.8 / Input / 1.9 / Orange Key / % (Answer: 5.56%)

4. PERCENTAGE INCREASE OR DECREASE:

General format: Variable X increases (decreases) by Y%.

Example: A stock is $62 and increases by 5%.

62 / + / 5 / % / = (Answer: $65.10)

Example: Sales in 2006 are $7m and fall by 2% in 2007.

7 / - / 2 / % / = (Answer: $6.86m)

Example: The current ex-rate is $1.80 / £. The pound is expected to appreciate over the next year and is selling at a one-year forward premium of 4%. What is the forward rate for the pound? 1.8 / + / 4 / % / = (Answer: $1.8720 / £ )

5. TO CHANGE THE SIGN OF A NUMBER

The + / - key will change the sign of a number.

Example: To enter $950 as a negative number for PV:

950 / +/- / PV

6. TO SET PAYMENTS PER YEAR

The factory default setting is 12 PMTS / YR. You should change this setting to 1 PMT per Year for this class, using the P/YR key (in orange below the PMT key)! Example: 1 / Orange Key / PMT Key (Sets Payments/YR to 1) Most of the problems in this class will be 1 PMT/YR.

7. BEG/END OF PERIODS

The BEG/END key (in Orange below the MAR key for the HP-10BII) will change PMTS/CFs from End-of-Period to Beginning-of-Period To set to BEG of period: a) Orange Key / MAR (You will now see the word "BEGIN" on your display) for HP-10B. The normal assumption is that CFs...