Hi I'm buddy brew attorney and real estate investor in Southern California and teach a personal finance class entitled calculate your way to financial freedom in today's video we have Michelle looking to lend out her money wants to know how much money she'll get back what her loan comes due now let's get started hello and welcome back in this situation we have michelle who's looking to lend out her money she finds a find the place where she can lend her money she can get good collateral and in this situation she's going to lend out our money for 120 months for ten years ten percent interest and she's able to lend out right now she's going to lend out ten thousand dollars and there's not gonna be any monthly payment she's going to get one lump sum back at in 10 years.
She wants to figure out how much is that going to be how much does that love.
I'm going to be you'll see in front of us we have a tablet with an app this app was developed by in a day development is the very similar to this which is the HP ten bii financial calculator ok now the buttons on these if you'll notice were almost identical the top here we have n stands for number of months I yr which is interest rate per year PV which is present value PMT which are payments in FV which is future value.
In this situation we know that Michelle is lending out ten thousand dollars for ten years at ten percent interest with good collateral and she'll be getting one lump sum payment at the end of ten years.
We know ten years is the equivalent of 120 months.
We put that here in the end the interest rate we know is ten percent put ten percent there PV is what she's lending out today.
It's ten thousand dollars we put negative because in this situation the money is leaving her pocket to gain interest.
She'll be losing access to that money.
Put negative and then payments are going to be zero she's not going to receive any payments over that time frame.
Right now we have the four we have to solve for the fifth we want to find out how much. This is going to be worth in 10 years all we have to do once we have the four numbers entered the it and the number is twenty seven thousand seventy dollars and 41 cents.
That means if she invests ten thousand dollars for ten years it should be for ten years 120 months at ten percent interest she will get at the end twenty-seven thousand seventy dollars and 41 cents and also just as a fun little thing here this app has a has a cash flow diagram that shows you how the money is moving if you have any questions or would like to reach out to me or find out about future classes i'm teaching or speaking appearances please visit my website www calm and sign up for my newsletter thank you very much and have a great day.