
7.
In the PMT eld, enter 300, point the cursor to the PV eld, and tap .
The PV value is calculated as 15,705.85, this being the maximum you can borrow. Thus, with your $3,000
deposit, you can aord a car with a price tag of up to $18,705.85.
Cash ow diagrams
TVM transactions can be represented in cash ow diagrams. A cash ow diagram is a time line divided into
equal segments representing the compounding periods. Arrows represent the cash ows. These could be
positive (upward arrows) or negative (downward arrows), depending on the point of view of the lender or
borrower. The following cash ow diagram shows a loan from a borrower’s point of view.
The following cash ow diagram shows a loan from the lender's point of view.
Cash ow diagrams 325
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