Ti 85 Finance

The Texas Instruments TI-85 calculator, while primarily known for its graphing capabilities, could also be used for basic financial calculations, although not as robustly as a dedicated financial calculator. Its limited financial functionalities are accessed through programming and manual input, making it a valuable tool for students and individuals learning the underlying concepts of finance rather than solely relying on pre-programmed functions.

One of the core applications was calculating the Time Value of Money (TVM). The TI-85 didn’t have built-in TVM solvers like dedicated financial calculators (e.g., TI-83/84 Plus CE, TI-BA II Plus). Users had to create their own programs to compute present value (PV), future value (FV), interest rate (I/YR), number of periods (N), or payment (PMT). These programs would leverage the fundamental TVM formula:

FV = PV * (1 + I/YR)^N + PMT * (((1 + I/YR)^N – 1) / (I/YR))

Creating such a program involved defining variables, inputting known values, and using the equation to solve for the unknown. Careful attention to the sign convention was crucial (e.g., cash inflows are positive, and cash outflows are negative). The program would prompt the user for the known values (N, I/YR, PV, PMT, FV) and would then use a simple solving algorithm (often involving rearranging the formula) to calculate the missing value. While tedious compared to dedicated financial calculator functionality, this process reinforced the understanding of the TVM formula itself.

Beyond TVM, the TI-85 could be programmed for more advanced calculations like amortization schedules. An amortization schedule breaks down each loan payment into its principal and interest components. A program would iterate through the loan term, calculating the interest portion of each payment (based on the outstanding loan balance), subtracting that interest from the total payment to determine the principal portion, and then updating the outstanding loan balance. This was useful for understanding how loan balances decrease over time and how much interest is paid throughout the loan’s lifespan.

Other potential financial applications included calculating net present value (NPV) and internal rate of return (IRR). Again, programs were required. NPV involved discounting future cash flows back to their present value using a discount rate and summing them. IRR required finding the discount rate that made the NPV equal to zero, which typically involved iterative approximation methods. The TI-85’s programming capabilities allowed for implementing these iterative techniques.

Despite its capabilities, the TI-85 had limitations. It lacked the speed and ease of use of dedicated financial calculators. Programming was time-consuming, and debugging could be challenging. Input errors were common. The calculator’s display was also less user-friendly for presenting financial results compared to models designed specifically for financial calculations. Furthermore, it lacked specialized functions for things like bond valuation or depreciation calculations that are standard on financial calculators. Therefore, while the TI-85 could perform basic financial calculations, it was better suited as a learning tool for understanding financial concepts rather than for complex, real-world financial analysis where speed and accuracy are paramount.