Hewlett-Packard 17BII+ Tutorial
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Hewlett-Packard 17BII+
Tutorial for Use with Fundamentals 11/e and Concise 5/e
This tutorial was developed for use with Brigham and Houston’s Fundamentals of Financial Management, 11/e and Concise, 5/e, especially Chapter 2, the Time Value of Money. The calculator’s 309-page manual covers all of its functions in detail, and it is worth the time to go through the manual. However, this does take time, and many of the calculator’s features are not necessary for working the problems in the text. Therefore, we focus on just what’s needed to work the text problems. We recommend that you read the text to get an idea about the concepts, then go through the tutorial to learn how to work the problems efficiently. The examples in the tutorial are identical to the examples in the text, which makes simultaneous coverage especially efficient.
Although the tutorial focuses on Chapter 2, it does have a section on Statistical Calculations, which are needed for Chapter 8 of the text. You can defer that part of the tutorial until you get to Chapter 8 of the text. Also, note that the TVM applications covered in text Chapter 2 and this tutorial are required for many text chapters, especially those dealing with bond and stock valuation and capital budgeting. Therefore, it will pay big dividends to learn how to use your calculator early in the course, like right now.
BASIC CALCULATOR FUNCTIONS
The HP17BII+ performs all the basic arithmetic functions: addition, subtraction, multiplication, division, exponents, and so on that can be done with any calculator. But it can also solve TVM problems and do certain statistical and math calculations that simple calculators cannot do.
The GOLD shift key
Most of the keys have white numbers or lettering on top, then gold lettering on the sloped front side. The white and gold colors are used because the keys can perform more than one function. The gold shift key, with no lettering but a gold swatch, allows the user to activate the gold functions. If the gold shift key is not pressed, then the function keys perform the function indicated by the white lettering. Also, note that pressing the gold shift key GOLD places the an “up arrow” symbol in the upper left corner of the LCD display. Press the GOLD key again and the arrow goes away. The GOLD key is a toggle key that switches back and forth between the regular and the gold functions, like typewriter shift keys. After you press GOLD , look only at the gold functions. In this tutorial, whenever you see the GOLD key, the lettering on the next key corresponds to the gold function, not the primary (white) function.
Turning the calculator ON and OFF
To turn on the calculator, press CLR .
Note that the CLR key is in the lower left corner of the keypad—the face of the key has a white "CLR," while the word "OFF" appears at the bottom of the key in gold. To turn the calculator off, press GOLD OFF . Thus, the two keystrokes required to turn the calculator off are (1) press the gold shift key and (2) then press the “CLR” key. Thus, by pressing the gold shift key first, we are activating the gold function on the “CLR” key, which turns the calculator off.
To conserve the battery, the calculator turns itself off about 10 minutes after your last keystroke. Note too that the calculator has a continuous memory, so turning it off does not affect any data stored in the calculator. However, the display does go to zero.
Calculator language setting
The first time you turn on your HP 17BII+, you will have to define the appropriate language setting. At the “SELECT LANGUAGE” prompt, you can choose between German, English, Spanish, French, Italian, or Portuguese. We will assume that you will select ENGL, for English. However, if you are an international student, you may elect for another language. If you do so, the instructions in this tutorial will still be generally valid, but specific details about menu listings will be slightly different.
The menu system
Many of the HP17BII+ calculator’s functions are accessed through an on-screen menu system. The main menu can be accessed at any time by pressing GOLD MAIN . The main menu options are:
FIN BUS SUM TIME SOLVE CURRX
Below each menu option there is an arrow that must be pressed to select that particular menu option. This tutorial will focus on using the FIN and SUM functions, but readers are encouraged to refer to the HP 17BII manual to learn how to use the other menu options.
Press FIN and you will see a list of financial functions, including:
TVM ICNV CFLO BOND DEPRC
These options represent the time value of money, interest conversion, cash flow register, bond calculation, and depreciation calculation menus. Remember, pressing
GOLD MAIN will always take you back to the main menu, while pressing EXIT will allow you to go back one layer in the menu system. For the duration of this tutorial, whenever you see a command in a box, like EXIT , it may refer to a function on a key or a menu option. From the context of the tutorial and the other keystrokes, it should not be difficult to determine which is applicable.
Clearing the calculator
To clear the calculator’s memory, press GOLD CLEAR DATA . Clearing the calculator is important, since leftover data in the calculator’s memory can lead to errors. You should get into the habit of automatically clearing memory before starting a new calculation. Occasionally, you may want to save data, but in general you will be entering all new data, so starting with a clear memory is the safest approach.
There are three different ways to clear data:
ß clears numbers on the display one at a time.
CLR clears the entire display, but not the memory.
GOLD CLEAR DATA clears the display and all memory. This is the safest way to clear data, and the procedure we generally use.
Changing the decimal and screen display
Depending on what you are doing, you may want no decimal places, two decimal places, 4 decimal places, etc. The number of decimals displayed can be changed easily. To demonstrate, enter the value 5555.5555 and press the = key.
If your display is currently set for two decimal places, the value is truncated to 5,555.56. To change the number of decimal places from 2 to 4, press DSP FIX 4 INPUT . The value 5,555.5555 is displayed instantly.
To change back from 4 decimal places to 2, press DSP FIX 2 INPUT . Now the value 5,555.56 is displayed. (Rounding is automatic.)
We usually set the display to 2 places, which is convenient when working with dollars and percentages. However, we often use 4 decimal places when dealing with interest rates and with rates of return that are entered as decimals.
Finally, to control the brightness of the LCD display, hold down CLR and, depending on whether you want more or less brightness, press either + or – .
USING THE FINANCIAL FUNCTIONS
Settings: Periods per Year (P/YR)
The HP17BII+ comes out-of-the-box set assuming that when any payment stream is entered, 12 payments are made each year, or monthly. Generally, though, most textbook problems are based on one payment per year. So, if you tell the calculator there are 8 payments by setting N = 8, it would assume that they are made monthly, not annually, so the calculated answer would be wrong—you would be too high on PVs and too low on FVs.
To check the current payments per year setting, access the time value of money menu, by pressing FIN TVM . The display shows the setting for periods per year.
To change the setting to one payment per year, press OTHER 1 P/YR (starting from the TVM menu). Now the calculator is set to assume 1 P/YR. We normally leave the calculator setting at 1 P/YR. If a problem calls for monthly payments, we adjust the number of periods and the interest rate as explained later in this tutorial.
Settings: BEGIN and END Mode
Annuities provide payments over a number of periods. For some annuities those payments are made at the beginning of each period, while for others the payments are made at the end of the periods. The calculator can be set to deal with either payment pattern, or at BEGIN or END mode. Most annuities have end-of-period payments.
When you access the TVM menu, you will notice that it shows you the number of payments per year and it indicates whether you are in BEGIN or END mode. To toggle between BEGIN and END modes, press OTHER BEG or OTHER END , from the TVM menu. We recommend leaving the calculator in END mode, then switching to BEGIN when required, and then switching back to END when you are done.
BASIC TIME VALUE OF MONEY (TVM) CALCULATIONS
When you access the TVM menu (press EXIT to return you to this menu from the begin and end mode settings), you will see the following options:
N I%YR PV PMT FV OTHER .
This is the primary TVM menu and it contains the basic TVM inputs that will be used to solve many problems. If you know any four of the five TVM variables, the calculator will solve for the fifth. The OTHER option allows you to access TVM settings (like P/YR and BEGIN/END mode) and the amortization feature.
FV and PV for lump sums
We first consider TVM calculations with a single (lump) sum.
Example 1: Calculating the FV of a lump sum
What’s the FV of $100 after 3 years if the interest rate is 5%?
First, clear by pressing GOLD CLEAR DATA . This sets all the variables, including PMT, to zero. Next, enter the following data:
3 N
5 I%YR
100 +/– PV The +/- key changes the 100 to -100.
0 PMT You could skip this step, but it’s safer to enter the 0.
Now press FV to get the answer, $115.76.
Since the PV was entered as a negative number, the FV is automatically displayed as a positive number. You will notice that after you enter a variable into the TVM worksheet, the display shows you what value has been entered. You can recall any input variable by pressing the appropriate key.
Example 2: Calculating the PV of a lump sum
What is the PV of $115.76 due in 3 years if the interest rate is 5%?
Clear the calculator and then enter the following data:
3 N
5 I%YR
0 PMT
115.76 FV
Pressing PV gives the answer, -$100.00. If we had $100 today, it would grow to $115.76 after 3 years at a 5% rate.
Example 3: Calculating I%YR
Assume you lend someone $100 today and they must pay you $150 after 10 years. No payments will occur between now and Year 10. What rate of return would you earn?
10 N
100 +/– PV Convert the 100 to -100 to indicate an outlay.
0 PMT
150 FV
Press the I%YR key and the calculator provides the earned rate of return, 4.14, which means 4.14%. Note that the calculator displays 4.14 rather than 0.0414 or 4.14%. Don’t clear the calculator; we need the data for the next example.
Example 4: Overriding a value to find a new interest rate, I%YR
Suppose you want to modify the preceding example, lending only $95 but still receiving $150 after 10 years. What rate of return would you earn on the modified loan?
If you left data from the preceding example stored in your calculator, you can override (or replace) the PV of 100. Just enter 95 +/– PV , and when you press I%YR , you get 4.67%, the new interest rate on the loan. You could override other variables similarly and thus do “what if” analyses to see how the output changes with changes in the inputs.
Example 5: Calculating N
Suppose you currently have $500,000 in an account that is earning 4.5%. You want to find out how long it will take your account balance to reach $1,000,000.
4.5 I%YR
500000 +/– PV
0 PMT
1000000 FV
Press the N key and the calculator returns 15.75, the number of years before you have $1,000,000 in the account. Note that the calculator requires you to enter the interest rate as 4.5 rather than either 0.045 or 4.5%.
Recalling information
Now press GOLD OFF to turn off the calculator, and then turn it back on. The display will show exactly what it showed before being turned off. All the data in the TVM memory is still there, until it is cleared by GOLD CLEAR DATA .
Annuities
Annuities can also be analyzed with the TVM keys. Now we have a payment, so we must enter a non-zero value for the PMT. There are 5 terms in the basic TVM equation, and if we enter data for any 4 variables the calculator will solve for the fifth.
Example 6: FV of an ordinary annuity
What’s the FV of an ordinary annuity of $100 for 3 years if the interest rate is 5%?
0 1 2 3
| | | |
0 -100 -100 -100
There is no beginning amount, so PV = 0. Thus N, I%YR, PV, and PMT are given, and we must solve for the FV:
3 N
5 I%YR
0 PV
100 +/– PMT
Now press the FV key to find the answer, FV = $315.25.
Example 7: FV of an annuity due
If the interest rate is 5%, what is the FV of an annuity due where we deposit of $100 at the beginning of each of the next 3 years?
0 1 2 3