CPCU® students often ask if it is necessary to get a financial calculator for the CPCU 540 exam.
You can absolutely pass the CPCU 540 exam without using a financial calculator, but some people find that they feel more confident when given the option to use a financial calculator. In this post, we will explore the pros and cons of using a financial calculator, and we will also give you some tips to apply if you decide to go into the test with one.
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What is the financial calculator used for on the CPCU 540 exam?
The financial calculator is mainly used for chapter 7 of CPCU 540, which has to do with calculating the present and future values of money.
In a nutshell, the idea is that money you receive today is technically worth more in the future, because you have time between now and that future date to invest the money and earn interest on it. It also works the other way around: if you need a certain amount of money at a specific point of time in the future, you don’t need to deposit that full future amount now because you can invest a slightly lesser sum and let it grow to the desired amount by letting it earn interest.
On the CPCU 540 exam, you will be given scenarios that require you to calculate the present or future value of the given dollar amount. There are two ways to calculate the correct answer:
- Using present/future value tables plus a basic calculator
- Using a financial calculator
The Institutes’ course focuses on teaching the calculations using a financial calculator, so you’ll have to turn to other resources such as our online course for CPCU 540 if you want to learn how to use the tables instead.
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Should I get a financial calculator for the CPCU 540 exam?
There are several pros and cons to consider when it comes to deciding whether or not you should use a financial calculator versus just using the present/future value tables plus a basic calculator.
Ease of learning how to use them
For most people, the tables are much more intuitive and easy to pick up than the calculator. However, some students find that it is worth investing the time to learn how to use the calculator because once you master the button sequence, the calculator can do the math a little faster than a person doing manual calculations with the tables.
The button sequence for the financial calculator does vary from brand to brand, so it is important to find tutorials that are specific to your calculator brand. If you are not using one of the more popular calculator models, you will need to do your own research to learn what the button sequence would be for your particular calculator brand.
How IEG can help: We have you covered no matter which method you prefer! Our study materials for CPCU 540 include step-by-step instructions on how to use both the tables and the two most popular calculator brands (the Texas Instruments BA II Plus financial calculator and the HP 10bII financial calculator).
Cost
You can easily find the present value and future value tables online and print them for free. We also include the tables as part of our CPCU 540 study materials.
In contrast, financial calculators cost about $30-40 brand new, but you can get them used for cheaper, or perhaps you know someone who can lend theirs to you for free. Another alternative is to download an app that mimics a financial calculator. The downside to using an app, though, is that you’ll probably have to figure out the proper button sequences on your own. There are plenty of YouTube videos for the two most popular financial calculator brands (the Texas Instruments BA II Plus financial calculator and the HP 10bII financial calculator), but not many for others.
Unless your profession is finance-related, you are highly unlikely to use the special functions of a financial calculator again. As such, some students prefer to avoid spending the money for a financial calculator or app, and use the tables instead.
Sense of Confidence
Some people feel better about going into the test with a financial calculator because it helps them calculate the answer faster and they are less likely to make simple arithmetic mistakes. On the other hand, some worry that they will mix up the button sequences and slow themselves down. Ultimately, it is better to go with whatever method you feel more confident in. This is a completely subjective factor that is dependent on you and you alone.
Which financial calculator should I get?
The two most popular choices are the Texas Instruments BA II Plus financial calculator and the HP 10bII financial calculator. However, you are not limited to only these two choices. The CPCU 540 Course Guide (The Institutes’ white workbook) has a section entitled “About the CPCU 540 Exam,” which states:
Although a financial calculator is not required for the exam, you are allowed to use any solar or battery powered calculator other than one with alphabetic keys or paper tape. A calculator that permits the input of alphabetic keys (a,b,…,y,z) for the formation of words is not permitted. Any business/financial calculators, including those that are programmable, that meet these criteria are permitted.
Tips for Using a Financial Calculator
If you decide to use a financial calculator for your exam, here are a few tips you should follow to ensure that everything goes as smoothly as possible:
#1: Practice, Practice, Practice
Technically, this tip applies to learning the present/future value tables as well, but we cannot emphasize enough the importance of practicing over and over until you feel completely comfortable using the calculator.
Work though as many practice problems as you can, and be sure to refresh your memory by practicing again the day before your exam.
How IEG can help: Our study materials for CPCU 540 will walk you through the exact button sequence to press for each type of present value & future value problem you may encounter. We also have tons of practice problems for you to test your mastery.
#2: Get in the Habit of Clearing Your Calculator Memory
One of the easiest ways to get the wrong answer for a problem is to forget to clear your calculator’s memory. If you don’t do that, the calculator might base its computation on variables from a prior problem you were working on. Make it a habit to clear your calculator’s memory every time before you even attempt a new problem.
#3: Double Check Your Batteries
If you do not have a solar-powered calculator, make sure you put fresh batteries in! You do not want to find out in the midst of your exam that your calculator died on you for a reason that was totally preventable.
CPCU 540 Study Materials
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For buyer's personal use only (non-transferrable and not for resale)
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Based on CPCU 540: Contributing to Insurer Financial Performance (1st edition)
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About your instructor
Insurance Exam Guides (IEG) was founded by Stacy Trinh, CPCU®, who first started her teaching journey at the request of her co-workers who were preparing for their CPCU exams. Because of her reputation as an adept trainer and motivator, Stacy's co-workers had asked her to lead a class. The feedback on her sessions and study materials was overwhelming positive, and her students encouraged her to share what she had to offer with the rest of the CPCU community.
Since then, Stacy created a library of study materials for both CPCU® and AINS® that have helped thousands of students pass their exams. As an accounting major and former claims adjuster, her style of instruction incorporates both a financial and operational perspective that makes her study materials well-rounded. She looks forward to helping many more students continue to succeed, including you!
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