Finding interest rate using financial calculator

How to use financial calculator to find the interest rate for an investment

Okay bismillah rahman rahim welcome to my video today i would like to share on how to use the financial calculator for calculating interest rate okay so i have here my financial calculator which i’m using the casio fx series okay where today we are going to solve a problem of finding the interest rate of an of an investment okay i have here a question about

Rishi singh who is investing 1500 of his money and expected to get a return of 2000 at the end of three years so we all know the um the equation for future value is actually fv okay equals to pv times 1 plus r n so basically we have here in the equation the f the future value which is 2 000 the present value which is 1 500 okay the r is remain unknown and then

We have n which is three so what we do here is actually we put all this information inside our calculator okay so before we start we would like to of course you have to switch on your calculator and then you have to reset all the information clear all the information in the calculator as for mine i have to push the button shift and then clear okay then i just

Follow the instruction whether i want to clear the setup the memory or all i will choose all okay three and then it says here if i um i’m sure yes i just have to push this button yes and then push ac to clear all so basically my calculator is all cleared so next we have to put in the information that we have uh from the equation here okay into the calculator

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Okay so what we do is first uh we put in the 2000 amount 2000 okay okay since this is an equation you cannot just simply uh just push this button because this is actually too soft okay so what you do is you as for mine okay as for mine i have to because i’m looking at this uh this function okay which is uh also equal okay so alpha equal so that i have that that

Symbol in the in the calculator so equals to 1500 okay so we have here the function of opening bracket and then we have 1 plus r okay so for this calculator we don’t have the r so we have x so alpha and then we have here x x all right and then we just close the bracket and then we have also here the n value which is three so i’ll use this function okay to find

N sorry to to put in three okay put in three so here i have it here okay now i have put all the information in the equation so i want to solve this x what is the value of x so i just uh push the button shift and then push the buttons off okay solve for x and then i just put equals to so now it’s solving for x so if you look at the item here it is 10.00 percent

So this is the answer for the question which is 10.06 percent so returning to the question what is the annual rate of return of rich will rishi earn with this investment so the answer is 10.06 percent so we go for the next question it says here rishi is considering another investment of equal risks that earn an annual return of 8 so which one should he choose

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So of course he should choose this 10.6 which is much much higher than eight percent all right so basically we have answered the questions i hope my video helps you thank you

Transcribed from video
Finding interest rate using financial calculator By Dr. Cat