A financial calculator is a device that is used for calculating or performing financial functions as is required in business entities. Mostly, financial calculators are needed by business firms but can also be used by students of commerce or business background. Financial calculators are used for calculating simple interest, compound interest, cost/sell/margin price, amortisation etc. For a more detailed understanding of the utilities of financial calculators read ahead:
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Calculating the compound interest
This is one of the most common and essential uses of a financial calculator, specifically for investors. After all, who does not love investing in their money or knowing the rate at which it is growing. Compound interest helps to know the rate at which the money will grow or multiply in a certain period. Though mathematically calculating the compound interest can take a bit longer but with the use of a financial calculator calculation not just becomes easy and convenient but is accurate and results are received within seconds.
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Finding out the EMI (Equated Monthly Instalments) on Personal loans
It is extremely challenging to find out the EMI’s on loans by hand. But a financial calculator eases up the process by allowing easy and quick calculations of EMI’s on a loan. Hence, this brings much clarity to the reader's mind, about the amount of EMI that they need to pay to their lenders.
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Calculating the Future Value of Investments
Earlier it was quite difficult for the investors to predict the future value of their investments. Even estimating the future value of investments was not accurate and highly vague. But a financial calculator helps to determine the future value of investments of the investors with much ease. This value can be achieved in three simple steps:
Step 1
Entering the Initial Amount in rupees. Suppose, the initial amount of the investment is 20,000.
Step 2
Entering the rate of interest which we can assume to be 12%.
Step 3
In the end, you are required to input the period in years, suppose 5 years.
Once the number of years is mentioned, the final amount or the future value of the investment would be calculated. Based on the value calculated, one can decide if they want to invest or not.
These were the three most crucial utilities of a financial calculator. However, a financial calculator can also be used for other purposes as well which primarily includes calculation of simple interest rate, or determining the actual cost, profit margin and the selling price of a certain product.
Why use Financial Calculators?
While Financial Calculators are of much utility and significance, still many would prefer deriving calculations by hand rather than a calculator. Here are a few reasons why one should start using a financial calculator.
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Accuracy
One of the most important benefits of using a financial calculator is the accuracy of the results which you get using a financial calculator. On the other hand, calculations performed by hand are not always accurate.
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Quickness of results
Another most crucial reason why one should switch to a calculator is the quick results or answers, which can be derived in just a few seconds.
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Suitable for even non-professionals
The best financial calculator can even be used by non-business professionals, which allows them to perform calculations and derive answers in just a few simple steps.