Financial Consultant for Palm Pilot v 2.0

Operational Overview for TestDrive kit

WelcomeWelcome to the Financial Consultant calculator for Palm Pilot devices. This calculator has been designed specifically for real estate, retailing and business professionals who need to use their Palm Pilot to make fundamental financial decisions quickly and accurately. We are confident that this software package will provide you with a rich problem solving environment that is unparalleled in its ease of use, power and flexibility.We especially welcome your feedback— so if there are new features that you would like us to consider or just general comments please feel free to contact us at the address detailed at the end of this document.

A note about this users guideThis guide has been provided for the convenience test drive version users and provides a succinct operational overview of the Financial Consultant. A greatly expanded bound edition of the Financial Consultant 2.0 guide is included with the full product

Important DisclaimerA considerable amount of effort has been made to ensure that this product provides you with dependable answers and years of trouble free operation. However, LandWare, Inc. makes no warranty of any kind with regard to this software and keystrokes contained within this manual and shall not be liable for any consequential, incidental or indirect damages incurred through the use of this software.

Copyright and Distribution NoticePlease remember that the Financial Consultant is a commercial product and is protected by strict copyright laws. Any unauthorized distribution is illegal.This manual and the software described in it are copyrighted with all rights reserved. No part of this publication may be reproduced, transmitted, transcribed, stored in a retrieval system, or translated into any language in any form by any means without the written permission of LandWare, Inc.

Installing the Financial ConsultantUse the Installer application that came with your PalmPilot HotSync software to install the finCALCTD.prc file. If you require further guidance than please consult your original Financial Consultant users guide or call LandWare support at 201 2617944.

The DisplayThe display shows input data, interim results and answers to calculations. It contains a row of 30 characters for displaying the X registers, error messages and a row of status annunciators.

AnnunciatorsThe display contains six annunciators that relay the status of the calculator during various operations. The annunciators are “active buttons” so they can be tapped to alter their settings.

BEG Payments are at period start (ordinary annuity) for compound interest calculations. Tap to set END mode.END Payments are at period end (annuity due) for compound interest calculations. Tap to set BEG mode.360 The calculator is set to 360 day (30 day month) calendar.365 The calculator is set to 365 day calendar. Leap years are ignored.ACT Actual calendar is used. Leap years are taken into account.DMY Dates are input and displayed in DD.MMYYYY form.MDY Dates are input and displayed in MM.DDYYYY from.1YR Payments are made Annually.2YR Payment are made Bi-annually.QTR Payments are made quarterly.MTH Payments are made monthly.WK Payments are made weekly.DLY Payments are made daily (using the year length setting.)

Error messagesAny attempt to execute a calculation with an erroneous parameter (such as dividing by zero) will be trapped by the calculator and displayed on screen. You can clear error messages by pressing any key and then resume calculations.

• Division by 0— An attempt to divide by 0 has been made.• Expr too complex — Attempt to use more than ten pending operations or levels of parentheses. Algebraic mode only.• Illegal Parameter— Attempt to perform a math operation with improper input eg log(0), sqroot (-1) etc.• Invalid Date— The number entered cannot be interpreted as a valid date. Check its format.• Invalid Interest— Attempt to execute a TVM function with an illegal value stored in i/YR.• Invalid Payment—Attempt to execute a TVM function with an illegal value stored in PMT.• Invalid Period—Attempt to execute a TVM function with an illegal value stored in n• Invalid Range—Attempt to execute an Amrt function with illegal payment range specified.• No Solution—No solution is possible using the current values stored in the TVM registers.• Out of Range—The magnitude of the result has fallen outside the calculators operating range.• Statistics Registers—Attempt to perform a statistics function with an invalid number of data points. Check the contents of Register 9.

Display Formats

You can control the way numbers are displayed without altering their internal full precision representation. The following formats can be selected via the Preferences button . • Floating— Numbers are displayed using a floating decimal point.• Fixed (FIX)— Displayed numbers are rounded to n decimal places.• Scientific (SCI)— Numbers are displayed with one digit before the radix mark and multiplied by a power of 10. • Engineering (ENG)— Numbers are displayed in the same format as SCI but with an exponent that is a multiple of three.In Fixed, Scientific and Engineering modes the number of decimals displayed can also be set by the user.

Operational settingsOperational settings can be altered in two ways:

1. Tapping the annunciator icon in the calculators display.2. Via the Prefs window.

The following operational parameters can be specified to customize the way the Financial Consultant works.

Payment Mode-Tap the BEG/END annunciator to toggle between payment modes.Payment Frequency-The number of payments made each year can be specified using the Payments are made popup menu in the Preferences window or by tapping the 1/YR, 2/YR, QTR, MTH, WK, DLY annunciator.

Compounding Frequency-The interest compounding frequency can be specified using the Interest compounded popup menu in the Preferences window. Special attention should be given to this setting as it will effect all TVM answers. For the majority of circumstances it should be set to "With payments".

Year length-Tap the ACT/360/365 annunciator to set the year length to ACTUAL, 360 day or 365 days. This setting effects the CAL and Simple interest functions.

Date Format-Tap the DMY/MDY annunciator to specify how dates are entered and displayed. MDY as MM.DDYYYY, DMY as DD.MMYYYY This setting effects the CAL and Simple interest functions.

Input Logic- Choose between Algebraic without precedence(eg 2+3x4=20) or Algebraic with precedence(eg 2+3x4=14)

Display Modes- Choose between the following display formats: Engineering, Scientific Floating, Fixed.

Date CalculationsThe CAL Calendar function allows you to calculate:

1. The number of days between two given dates.2. A future or past date.3. The Day of Week for any date.

Date Entry modesUse the Date Format Preference to set the date input and display format. 1st December 1964 can be entered and displayed as:

• 1.121964 (DMY Mode) or• 12.011964 (MDY Mode)

Year Length SettingUse the Year length annunciator to set the year length assumed by the CAL and INT > Simple Interest functions. Choose between:

• ACT - Actual days. Leap years are taken into account.• 360 - Using the 360 day (30 day month) calendar.• 360 - Using the 365 day calendar. Leap years are ignored.

To perform date calculations:1. Tap the CAL button. (Today’s date is automatically entered)2. Enter two of the following: First Date, Second Date, or Days between dates.3. Tap the button corresponding to the unknown third variable.4. Tap Exit to close the form.

ExamplesCalculating a future date- If you purchased an apartment with an 120 day option on 14th May 1981 what would be the expiration date (assuming 360 DMY modes).

KeystrokesCAL 14.051981Tap First date120 Tap Days between datesTap Second date

Days between dates- Calculate the number of days between June 3, 1983 and October 15,1984 (assuming 360 MDY modes).

KeystrokesCAL 6.031983Tap First date10.151984Tap Second date

Tap Days between dates

Math operationsIn addition to the 12 scientific functions provided in the SCI menu, several other important math related operations are supported. These are discussed below.

Exchanging parametersThe contents of the X and Y registers can be exchanged by using the x<>y key. This operation can be very useful for:

• Obtaining the second result of a function that returns two values (eg Mean.)• Reversing the order of two operands in a two parameter function (eg y^x)• Reversing the order of two operands in a non commutative function (eg division.)

ExponentsUse the SCI > EEX function to enter numbers in exponent form.

To enter an exponent:Key in the mantissa portionSelect SCI > EEXKey in the exponent portion

Order of operationsWhen operating in Algebraic mode the following operator precedence is observed

1. Functions.2. Multiplication, Division.3. Addition, Subtraction.

Operators with equal precedence are performed left to right. The observation of operator precedence can be disabled if required by unchecking the with precedence option in the Prefs window.

Using parenthesesThe ( ) parentheses buttons can also be used to control the order in which an expression is evaluated. The portion of the expression enclosed in parentheses is evaluated first.

ExamplesCalculating x!- Calculate 3!Keystrokes

3 SCI > x!

Universal powers- Calculate 3 raised to the power of 4Keystrokes (algebraic mode)

3 SCI > y^x 4 =

Using Parenthesis- Calculate 3 x (2+4)Keystrokes (algebraic mode)3 x (2 + 4 ) =

Using Memory RegistersTen general purpose and five financial registers (n, PV, PMT, FV, i/YR) are provided. The general purpose registers can be used to set aside numbers as constants for use in later calculations. A special Tax rate memory is also provided for use by the Nett and Gross price functions.

Important noteRegisters 4 through 9 are also used by the statistics functions and will be altered if the CLR > Statistics registers and ∑x> Input data functions are used.

Storing NumbersThe MEM > Store function followed by a digit 0 to 9 will copy the contents of the display into the memory register specified by the digit.

Recalling NumbersThe MEM > Recall function followed by a digit 0 to 9 will copy the contents of the register the memory register specified by the digit into the display. The MEM > Recall functions can also be used to recall the contents of the finance registers (n, i/YR, PV, PMT, FV).

ExamplesStoring a number- Store 45 into register 8

Keystrokes45 MEM > Store 8

Percentage CalculationsThe following Percentage calculations are supported:

• Percentage fraction.• Add-ons and Discounts.• Percentage change.• Percent of total.• Cost/Selling Price Markups.• Cost/Selling Price Margins.• Nett and Gross Price.

Percentage fraction

To find 45% of 55Keystrokes55 x 45 % =

Add-ons and DiscountTo increase 34 by 22%:

Keystrokes34 + 22 % =

To decrease 78 by 43%Keystrokes78 - 43 % =

Percentage changePercentage change is expressed as a percentage of the Old Value.

1. Tap ∆ > % Change.2. Enter two of the following: Old Value, New value, or Percent Change.3. Tap the button corresponding to the unknown variable.

Performing Percent of totalPercent of total is expressed as a percentage of the Total amount.

1. Tap ∆ > % of Total.2. Enter two of the following: Total amount, Part of total, or Percent of total.3. Tap the button corresponding to the unknown variable.

Cost/Selling Price with MarkupsMarkups are expressed as a percentage of the Cost price.

1. Tap ∆ > Markup2. Enter two of the following: Cost Price, Selling Price, Markup (as a whole %).3. Tap the button corresponding to the unknown variable.

Cost/Selling Price with MarginsMargins are expressed as a percentage of the Selling price.

1. Tap ∆ > Margin.2. Enter two of the following: Cost Price, Selling Price, Margin (as a whole %).3.Tap the button corresponding to the unknown variable.

Nett and Gross PriceA single tap mechanism is provided for calculating before and after TAX amounts.

To store a TAX rate for future use:1. Enter the tax rate as a whole number (eg 30% = 30.0)

2. Tap MEM > Set TAX rate.

To calculate a Nett amount:1. Enter the Gross figure.2. Tap ∆ > Before TAX

To calculate a Gross amount:1. Enter the Nett figure2. Tap ∆ > After TAX

ExamplesPercent Change- Calculate what % of increase changes 23 to 67.

Keystrokes∆ > % Change23 and tap Old Value67 and tap New ValueTap Percent Change

Retail Margin- You purchase Guitars for $225 and sell them for $300, what is the margin as a percentage of cost price.

Keystrokes ∆ > Margin225 and tap Cost price300 and tap Sell PriceTap Margin

Selling Price- Your standard markup is 60%. If you buy software for $55, what is the retail price.

Keystrokes∆ > Markup60 and tap Markup55 and tap Cost priceTap Sell Price

Calculating post tax amounts- What is the total cost of a $340 garment including Sales tax. NOTE: You must first set up the TAX register with the current TAX amount before using the After TAX and Before Tax functions.

Keystrokes340 ∆> After TAX

Interest calculationsThe Financial Consultant supports the following interest calculations:

• Simple Interest.• Compound Interest.

• Conversions between Nominal and Effective interest rates.

Simple InterestSimple interest on a Loan is expressed as a percentage of the Principal Value (PV) and is repaid in a lump sum. Use the INT > Simple Interest function to calculate simple interest owing.

To calculate Simple InterestEnter the interest rateTap i/YREnter the loan amountTap PVEnter the loan period (in days)Select INT > Simple Interest

The amount of accrued interest is calculated according to the current year length setting.

Compound InterestCompound interest calculations take into account that interest added to the principle at specified compounding periods also accumulate interest. (ie savings accounts mortgage, leases etc). The i/YR function can be used to calculate the Compound Interest rate.

To calculate the Interest rateVerify the Payment Frequency.Verify the Interest Compounding Frequency.Verify the Payment mode.Enter values for the known PV, FV, n, PMT values.Tap the i/YR button.See the Savings, Loans and Mortgages section for further details.

Nominal Effective interest ratesInterest rates are normally expressed as nominal interest rates. A nominal interest rate is an annual rate that is compounded periodically (ie 12% per annum compounded monthly). When investments have different compounding periods (ie monthly vs quarterly) then effective interest rates are used to compare them. (eg 18% pa compounded monthly is equivalent to earning 19.56% pa compounded annually.)The INT > Interest Conv function allows you to convert between nominal and effective interest rates using two possible compounding methods:

• Periodic compounding (ie monthly, quarterly, yearly).• Continuous compounding.

Performing Interest conversionsTap INT > Interest ConvEnter the known Nominal or Effective interest rate.Tap the corresponding button to enter the value.

Enter the number of compounding periods per year. Enter 0 to specify "continuous" compounding.Tap Compounding Periods.Tap the button corresponding to the desired rate.

ExamplesAnnual yield from a loan- Find the rate of return on $1000 compounded monthly if it amounts to 1500 in 5 years.

KeystrokesCLR > Finance Registers1000 +/- PV1500 FV5 n > Enter Term (years)i/YR (returns 8.14)

Comparing lender rates- Which if the two following banks offer the best interest rate?ASB Bank: 6.7% annual interest, compounded quarterlyBNZ Bank: 6.65% annual interest, compounded continuously

KeystrokesCLR > Finance RegistersINT > Interest Conv...6.7 Tap Nominal Annual Rate4 Tap Compounding periodsTap Effective Annual rate6.65 Tap Nominal Annual Rate0 (specifies continuous compounding)Tap Compounding periodsTap Effective Annual rate

StatisticsPerforming statistical calculations involves two phases. First you enter the data points using ∑x> Input data. The Financial consultant accumulates intermediate statistics from this data. Statistical calculations are then performed.

Statistics RegistersThe Statistics functions utilize a block of the built-in storage registers to hold the intermediate statistics accumulated from your input data. Registers 4 to 9 are used for storing the following:

R4 - Summation of xR5 - Summation of x2R6 - Summation of yR7 - Summation of y2R8 - Summation of xy

R9 - # data points

Entering data pointsBoth single and two variable data points can be analyzed. It is very important to execute the CLR > Statistics Registers function before entering new data. To enter data:1. ∑x> Enter data.2. Enter the y value and tap Set y value(if applicable.)3. Enter the x value.4. Tap Enter Data Point.

Correcting data pointsTo correct the entry of an erroneous data point.1. ∑x > Enter data.2. Enter the incorrect y value and tap Set y value(if applicable.)3. Enter the incorrect x value.4. Tap Remove Data Point.

Calculating the MeanThe mean is the arithmetic average of the data summed. The ∑x > Mean function will return the mean of x to the display. Tap to view the mean of the y values.

Standard DeviationA data set's Standard Deviation is a measure of its dispersion around the mean. The ∑x > Std Dev function will return the SD of x to the display. Tap to view the SD of the y values.

TotalThe ∑x > Total function will return the summation of the x values to the display. Tap to view the total of the y values.

CorrelationThe ∑x > Correlation function will return the correlation coefficient for the current data set.

ExamplesAverage Rainfall-Monthly Rainfall data is as follows: 34, 38, 44. Calculate the Average

KeystrokesCLR > Statistics Registers ∑x > Input Data34Tap Enter Data Point38Tap Enter Data Point44Tap Enter Data PointTap Exit ∑x > Mean

Savings, Loans and MortgagesThe Time Value of Money (TVM) functions (n, i/YR, PV, PMT, FV) solve problems that involve money earning compound interest over time. Use the TVM functions when the following conditions are true:

• Payment amount is constant.• Payments at regular intervals.

Use the Discounted Cash Flows (DCF) functions for problems that involve uneven cash flows.

Cashflow sign conventionsIt is important to keep in mind when entering and viewing results that:

• Money paid out is expressed as a negative number.• Money paid in is expressed as a positive number.

The sign is obviously dependent on your perspective. For example if you are a borrower then payment is negative, for lenders it is a positive value. You can use the +/- key to toggle the sign of the current number.

Payment ModeIt is important to ensure the payment mode is set correctly for your particular problem. Payments can be made at the BEGinning (annuity due) or END of the period (ordinary annuity). Mortgage payments are normally made at the end of the period. See Setting the payment mode for further details.

i% Compounding FrequencyThe i/YR function always specifies interest as an annual rate. Interest can be applied (or compounded) at varying frequencies. This frequency is specified using the Interest compounded preferenceWith most cases interest is compounded with payments and it should be set this way. The Financial Consultant does however provide the flexibility to alter the compounding frequency for certain scenarios (eg Canadian mortgages.)

Payment FrequencyUse the Payments are made preference to specify the frequency of payments (ie Quarterly, monthly etc) In most cases payments are made monthly.

Performing TVM calculations

To perform a Time value of money calculation:1. Verify the Payment Frequency.2. Verify the Payment mode.3. Enter values for the four known TVM values.4. Tap the button corresponding to the unknown value.

ExamplesMonthly Mortgage Payment-You take out a 25 year, $180,000 dollar mortgage at an annual rate of 13.5%. Calculate the monthly payment.

KeystrokesCLR > Finance Registers13.5 i/YR25 n > Enter Term180000 PVPMT (returns -2098.16)

Payment on a Canadian Loan.What is the monthly payment required on a 30 year, $30,000 Canadian mortgage with an interest rate of 12%Firstly ensure the Finance settings are set to the following:

• Bi-annual Compounding• Monthly payments

KeystrokesCLR > Finance Registers12 i/YR30 n >Enter Term30000 PVPMT (returns -301.92)

Loan Affordability- You want to pay $175 per month for 24 months on a 9.5% loan. How much can you borrow?

KeystrokesCLR > Finance Registers9.5 i/YR24 n > Enter Periods175 +/- PMTPV (returns $3811.43)

Loan Period Calculation-How many months will it take to repay a $4000 loan if your monthly payments are $200 and the annual interest rates are %9.5

KeystrokesCLR > Finance Registers9.5 i/YR 200 +/- PMT4000 PVn > Calculate # Periods (returns 21.86)

Car Lease Payment (with purchase option)- A $35,000 BMW is to be leased for 3 years, with an option to purchase for $7,500 at the end of the lease. Payments are made at the beginning of the month with an interest rate of 14%

KeystrokesCLR > Finance RegistersSet BEG Mode

14 i/YR3 n >Enter Term35000 +/- PV7500 +/- FVPMT (returns $-1349.31)

Unpaid Balance on a Mortgage- You have taken out a 30 yr $65,000 mortgage at 12.5% annual interest. You make monthly payments of $700. Calculate the Principal balance remaining after a year.

KeystrokesCLR > Finance Registers12.5 i/YR30 n > Enter Term65000 PV700 +/- PMTAmrt > Set Range...1 and Tap the First Period button12 and Tap the Last Period buttonExit (amortization range is now set)Amrt > Balance (returns $63949.85)

Investment AnalysisThe following functions (accessed via the DCF Discounted Cash Flows button) can be used to analyze investments that involve cash flows (money paid out or received) of uneven amounts that occur at regular intervals.

• IRR: Internal Rate of Return- the interest rate at which the net present value of the cash flows is 0. For 'conventional' investments the investment is attractive if IRR is positive.• NPV: Net Present Value- the present value of a series of cash flows plus the initial investment cost, calculated for a specific interest rate.• NFV: Net Future value - the future value of a series of cash flows, calculated using the NPV.• NUS: Net Uniform Series- the amount that is equivalent to the series of cash flows having a PV equivalent to the NPV.• TOTAL: Sum Total of the cash flows.

Conventional investment:A conventional investments is considered "attractive" if the IRR% is greater than the cost of the capital. Such an investment must meet the following criteria:

• Initial cash flow is negative.• Some cash flows are positive.• Cash flow sequence changes sign only once.• The sum (TOTAL) of the cash flows is positive.

Performing DCF calculations1. Verify/set the number of payments per year (usually set to Annual).2. Verify/set the Annual interest rate using i/YR (not required for IRR)3. Clear any previously entered cash flow entries using CLR > Cash Flows4. Enter the cash flow entries as outlined below. Payments you make are negative, money you receive is positive.5. Evaluate IRR, NPV, NFV, NUS and TOTAL by selecting them from the DCF popup menu.

Entering the initial cash flowTap DCF > Edit CF to open the cash flow editor.Enter the initial amount. This value must be negative.Tap the Amount cell in the Init row.

Entering subsequent cash flowsTap DCF > Edit CF to open the cash flow editor.Tap the previous CF number and select Insert from the resulting popup menuEnter the new Amount value and tap the Amount cell in the new row.Enter the new N value and tap the N cell in the new row

Deleting a cash flow entryTap DCF > Edit CF to open the Cash Flow editor.Tap the previous CF number and select Delete from the resulting popup menu

ExamplesDetermining effectiveness with NPV- You have the opportunity to buy a $17 million dollar factory with a useful life of 8 years and a 2.8 million yearly return. You want a return of at least 14% Will this be an worthwhile investment?Ensure the calculator is set for Annual payments and Interest compounding.

KeystrokesCLR >Cash FlowsCLR >Finance Registers14 i/YRDCF > Edit CF17 +/-Tap the Amount cell in the Init rowTap the Init cell entry and select Insert2.8Tap the Amount cell in the newly entered row8Tap the N cell in the newly entered rowExitDCF > NPV (returns -4.01)

Technical AssistanceWe at LandWare committed to providing the owners of the Financial Consultant with ongoing support. If you require technical assistance or have any questions concerning this product please contact us via:

Telephone (USA)voice: 201 261 7944fax: 201 261 7949Electronic mail : support@landware.comMail : LandWare, Inc.P.O. Box 25 Oradell, NJ 07649, USA

CreditsThe Financial Consultant is ©1997-1998 LandWare Inc. All rights reserved.The Financial Consultant and its accompanying documentation was designed and developed by Clinton Logan. Development was assisted by a Gaggia espresso coffee machine.

LandWare and “Software for Terra Firma” are trademarks of LandWare Inc. All rights reserved. All other brands and product names are registered trademarks of their respective holders.