Sharp EL-120 Specifications download pdf (Page 22)

Compound interest

This calculator assumes interest is compounded periodically in

ﬁ nancial calculations (compound interest). Compound inter-

est accumulates at a predeﬁ ned rate on a periodic basis. For

example, money deposited in a passbook saving account at

a bank accumulates a certain amount of interest each month,

increasing the account balance. The amount of interest received

each month depends on the balance of the account during that

month, including interest added in previous months. Interest

earns interest, which is why it is called compound interest.

It is important to know the compounding period of a loan or

investment before starting, because the whole calculation is

based on it. The compounding period is speciﬁ ed or assumed

(usually monthly).

Cash ﬂ ow diagrams

The direction of arrows indicates the direction of cash movement

(inﬂ ow and outﬂ ow) with time. This manual uses the following

cash ﬂ ow diagrams to describe cash inﬂ ows and outﬂ ows.

Payment (PMT)

......

Inflow (+)

Cash

flow

Present

value (PV)

Future

value (FV)

Time

Outflow (–)

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Sharp EL-120 Specifications Page 22