Course:  Fundamentals of Financial Planning
Lesson 5: Using the Calculator

Student Question:

If it would be at all possible, can you provide me with a practical working explanation of when to use begin mode key and the end mode key in solving these calculations? 

Thank you for your attention


Instructor Response:

Hi Eric,
Great question.  Ultimately, we look to the fact pattern of the question, but I can give the following general guidance using education planning as an example:

  • Future value of this year’s college cost – begin or end does not matter.  This will be true as long as there are no cash inflows or outflows during the period.
  • Capital required when the child begins college – always use begin.  The college expects to be paid before classes start.
  • Periodic savings – no general rule.  The fact pattern must tell you if the client will save at the beginning or end of the period.

 Interest on bonds is generally paid at the end of each six-month period.  

 If you have a specific question about a typical transaction, just let me know.