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PSION ORGANISER II
Finance Pack


The Psion Organiser II and the plug-in Program Packs and Datapaks form a sophisticated pocket computer system containing digital electronic components. They have been designed for ease of use, but to ensure that you make the most of their capabilities, we suggest that you read this booklet in conjunction with your basic Organiser manual.

To avoid any possible damage your Organiser II should not be exposed to extremes of temperature or humidity. Do not subject it to hard knocks or excessive force, nor use volatile fluids when cleaning the case.

© Copyright Psion Limited 1986. All rights reserved. This Finance Pack manual and the programs referred to therein are copyrighted works of Psion Limited, London, England. Reproduction in whole or in part, including utilisation in machines capable of reproduction or retrieval, without the express written permission of Psion Limited, is prohibited. Reverse engineering is also prohibited.

REGISTERED DESIGN APPLICATION Nos. 1019736 & 1019737
PATENT PENDING

Typeset by Keywords, Manchester
Printed by Premier Metropolis, London

Manufacturer's Warranty and Limitation of Liability

If within 12 months of purchase this program can be shown to the reasonable satisfaction of Psion to be faulty and not to function substantially as described in the user manual, Psion will (at the option of the purchaser) refund the purchase price or replace the program. Apart from this warranty, Psion will not in any event be liable for any loss, including consequential loss, caused by any error, defect or failure of the program, or howsoever otherwise arising, including but not limited to loss of use, loss of stored data, loss of profit or loss of contracts. This limitation of liability shall not apply to consumer transactions nor to any liability for death or personal injury.


CONTENTS

INTRODUCTION 1 USING THE FINANCE PACK 2 EXPENSES Newfile; Item; Find; Printer; Start and End Dates; Delete; End. 3 BANK New; Cheque; Balance; Find; Credit; Debit; Orders; New; Find/Edit/Delete/End; Archive; Printer; End. 4 NPV—NET PRESENT VALUE 5 IRR—INTERNAL RATE OF RETURN 6 COMPOUND 7 BOND 8 MORTGAGE 9 APR


INTRODUCTION

In the box containing this manual you will find a program pack for your Organiser 2. The external appearance is identical to that of a Datapak and it plugs into the Organiser in exactly the same way. Remove a Datapak or a drive cover by pulling on the ribbed outer section of the pack. Now insert the Finance Pack in the empty slot in the normal way. The Finance Pack may be used in either of the slots.

The Finance Pack is a substantial software system which turns your Organiser into a powerful tool for financial needs, both professional and personal. It contains a series of programs especially designed to solve common financial problems such as interest rate calculations, net present value, bond redemption yields, business expense logging and mortgage repayments.

The pack also contains a computerised, personal bank account system. This uses two data files which keep track of all account transactions, including all credits, debits and standing orders. Standing orders, for example salary, mortgage or insurance, are automatically credited/debited to the balance of the account as they fall due on the appropriate day of each month. You can also print out a detailed statement of the account and informs you of the present balance at any time. One 32K Datapak will hold typically three years of your personal bank records.

Used together with the facilities built into the machine, the Finance Pack turns the Organiser into the complete financial adviser — in your pocket.


1
USING THE FINANCE PACK

The procedures on the pack are accessed from a top-level procedure called FINS. This procedure name should be installed in the to a level menu of the Organiser by pressing the MODE key — according to the instructions in Chapter 16 of the Organiser manual.

When this procedure is run by selecting it from the main menu in the usual way, a menu is displayed, offering the options:

BANKBank account logger-records transactions, updates balance when salary or other regular credits are made, debits standing order payments and produces a statement of the account. Also allows you to look up particular transactions with the high-level FIND
EXPENSESUsed to record, list, find and print expense items
NPVCalculates Net Present Value of discounted cash flows for a given interest rate
IRRCalculates the Internal Rate of Return for a given set of cash flows as above
COMPOUNDCalculates the VALUE, FUTURE, PAYMENT, INTEREST or DURATION of a series of payments given the other four variables
BONDEvaluates the redemption yield of gilt or bond stock
MORTGAGECalculates mortgage repayments from the initial capital size, interest rate and duration
APRCalculates the effective annual interest rate on a loan or hire purchase agreement
ENDReturns to the main menu

Any of these options can be selected from the Finance menu in the usual way, by either using the cursor keys and the EXE key or the initial letter of the option required.

Alternatively, if you are likely to use just one or two of the items from the Finance pack on a regular basis, these may be inserted directly into the main menu of the Organiser under the names listed above. These can then be selected in the usual way like any other menu item and used directly.

After using any of the financial options you are returned to the Finance menu (or the main menu if running directly from there.) From the Finance menu you are able to return to the top level menu by selecting the END option


2
EXPENSES

The Expenses option in the Finance menu allows you to make a record of all general business expenses incurred. The program creates a file called EXPENSES, which can be stored in the internal memory of the Organiser or either of the Datapak devices. The information recorded will be very important to you and we strongly recommend the more secure Datapaks are used, rather than RAM, to record the data.

The file has headings for the cost of each item, a description, the category of the item (for example, GOODS, TRAVEL, ENTERTAINMENT and so on) and the automatic date-stamping of the expense item. The facility to enter a description and category for each expense item means that you can allocate items to particular projects or jobs.

You are able to scan through the expense file, edit or delete old entries and printout a complete formatted list of the file, or of all entries between a start and end date. All expense items may be marked as relating to home or export business and are automatically date stamped from the system clock.

Because the Organiser is so portable and convenient to use, we suggest you make entries when you spend the money. You will find those forgotten 'loose change' expenses of toll, parking etc. add up quickly

When the EXPENSES option is selected from the Finance menu in the usual way, a menu containing the following items is displayed:

NEWFILE / ITEM / FIND / PRINTER / EDIT / DELETE / END

These options offer the following facilities:

Newfile

Select this option when you use the Expenses logger for the first time. It prompts for the name of the device where the expenses file should be created; A: (RAM), B: or C: (Datapaks). It is recommended that you use a Datapak to store your expenses file; it will be far more secure than in the internal memory of the machine (device A:). The expenses file is created on the device specified and you are returned to the Expenses menu ready to use the program.

Item

ITEM allows you to enter an expenses item. When selected, it first prompts you for the amount of the expense. Type the amount of your expense in decimal format (i.e. ten pounds and fifty pence is entered as 10.50) and press the EXE key. A menu of expense categories is then displayed:

MEAL / TRAVEL / PETROL / HOTEL / GOODS / ENTERTAINMENT / OTHER

Expense items are categorised in this way because most companies organise their expense accounts with different budgets for different uses.

When the appropriate selection has been made, according to the type of expense item being logged, another menu appears; LOCAL / EXPORT. This allows you to specify whether an item is related to local or export business.

You may then give a text description of the item, say, Lunch with publisher, which will be stored along with the financial data. This description may be up to 16 characters long.

Press the EXE key, and the data entered is saved to the expenses file along with the current date so that all entries are automatically date stamped.

Find

This option operates in the same way as the top level FIND option. Press the EXE alone to step through all of the expense items in order, or type in some text and press the EXE key. Any expense items which feature this 'search clue' may then be viewed. Each press of the EXE key will display the next matching item.

Each part of the record is stored as a separate line, Or field, within the record, just like the records saved at the Organiser's top level. Use the UP and DOWN cursor keys to view the various fields; description, amount and so on. After the last record in the file has been examined, the screen displays the message:

NO MORE ITEMS  

You may now press the ON/CLEAR key to return to the Expenses menu, or the EXE key to continue with the FIND option.

To delete any item, press the DEL key while the item is displayed. The screen will show:

CONFIRM DELETION Y/N

Press the  Y  key and the item will be deleted. Press the  N  key and you will be returned to the item last viewed with no deletions.

Printer

This option allows a formatted report of the contents of the Expenses file to be listed to a printer. Any serial printer may be connected to the Organiser via the RS232 Communications Pack plugged into the Organiser's peripheral port at the top of the machine.

You enter start and end dates (see below) and all expense items entered between these dates are then listed to the printer in tabular form. Each expense item shows the date, category, description and amount for the item; a VAT payment (if applicable) and whether Local or Export. A total is printed for the month, and each month is printed on a separate sheet.

Start and End Dates

The EXPENSES and the BANK options in the Finance Pack use the same method of prompting for a start and end date for their listing functions. The method is described below. It allows you to produce a listing from any whole month, or number of whole months. The same method is used to enter an end date for the DELETE function within the EXPENSES option.

You are first prompted for month of the start date with the screen:

START DATE:   month mm: _

Type the number of the month (1 to 12) and press the EXE key. The start date will be taken as the first day of the specified month. You will then be prompted for the year with the screen:

START DATE:   year 19xx: _

Type the last two digits of the year and press the EXE key.

You will be prompted for the end date in a similar way with the screens:

END DATE:   month mm: _

and:

END DATE:   year 19xx: _

The end date may be the same as the start date. This means that the range taken for listing or deleting will be the whole of the month specified. If the end date is after the current system date then the latter will be taken as the end date.

Delete

When the DELETE option is selected, you are prompted for a start date as described above. All historic expense file entries up to the beginning of that month will then be deleted.

Note. We recommend that this option is not used unless you are certain that you have no use for historical information. Without deleting the information, you can always start a new expenses file on another Datapak.

End

Select this option to return to the Finance menu.


3
BANK

The BANK option from the Finance menu is a complete bank account transaction recorder. It enables you to record all cheques, standing orders, credits and debits, print out a comprehensive, formatted statement and check the balance of a bank account. Standing orders and regular credits are updated to the account balance automatically and other items can be added in a few seconds. The system will allow you to find particular transactions and answer such questions as, 'Did I pay the Gas bill last month, and if so, on what date with what cheque number?'

The files produced, usually on a Datapak, are secure. They can be archived for future reference and are far more comprehensive than the usual statements issued by the banks: a 32k Datapak will hold typically three years of complete bank records for tax purposes for example.

Each entry in the transaction file has an amount, description, type (cheque, standing order, credit, debit) date and cheque number if applicable. The cheque number is automatically incremented each time a cheque is recorded, standing orders are automatically credited or debited to the account on the same day each month and the running balance is maintained at all times.

Entries in the bank transaction file may not be deleted, as this could threaten the security of the files as a true historical record of the operation of the account. Company accounts are operated in this way, and errors must be corrected by a double journal entry with a corresponding debit and credit or credit and debit of a suitable amount.

Any additional entry which must be made to correct a previous erroneous entry may be annotated accordingly in the description part of the item record.

The BANK option usually maintains two files, one to record all day-to-day transactions, (BANKTR) and a second for standing orders (BANKSO). When you select the BANK option, a menu is displayed containing the following items:

CHEQUE / BALANCE / FIND / NEW / CREDIT / DEBIT / ORDERS / ARCHIVE / PRINTER / END

New

Select this option when you use the bank account system for the first time. It prompts for the name of the device where the bank account files should be created; A: (RAM), B: or C: (Datapaks), and prompts for an opening balance for the account. It then returns you to the BANK menu ready to use the program.

Note. It is strongly recommended that you do not set up the bank files on device A: (internal memory) as this is not as secure as the storage offered by Datapaks. The information on your bank account is vital to you and the system is designed to offer high security, integrity and capacity by using Datapaks.

If you attempt to use any of the other options from the BANK menu before setting up the account file with the NEW option, the following message is displayed:

BANK FILE DOES   NOT EXIST

Press any key to return to the BANK menu.

Cheque

Select this option from the BANK menu to record a cheque transaction on the account. You will be prompted first for the amount of the cheque, then for a description of the item of not more than 16 characters.

The cheque number will automatically be updated from the last cheque used and displayed on the screen. If this is correct, it can be accepted by pressing the EXE key. If this is your first entry or a cheque has been missed or scrapped or a new cheque book started, then you may change the cheque number by just editing the cheque number and pressing the EXE key. Thereafter, automatic updating of the current cheque number will occur. The item is automatically date stamped and added to the transaction file. Typically, an entry to the file will take around ten seconds.

You are then returned to the BANK menu to enter another item or make another selection from the menu.

Balance

This option calculates the current account balance, (and whether in credit or overdrawn), allowing for any credits and debits, including any standing orders which have fallen due since the program was last used.

Find

FIND operates in the same way as the top level FIND option. Press the EXE alone to step through all of the transactions in date order, or type in some text and press the EXE key. Any transactions which feature this 'search clue' may then be viewed. Each press of the EXE key will display the next matching item. The search clue could be the word GAS, or the three or four digits of a cheque number for example.

Each part of the record is stored as a separate line, or field, within the record, just like the records saved at the Organiser's top level. Use the UP and DOWN cursor keys to view the various fields; description, amount and so on. After the last record in the file has been examined, the Screen displays the message:

NO MORE ITEMS  

You may now press the ON/CLEAR key to return to the BANK menu, or any other key to continue with the FIND option.

Credit

CREDIT allows the entry of credited items or cash deposits, and operates in a similar way to the CHEQUE option. The difference is that the items are credited to the account, not debited, and there are no cheque numbers.

Debit

DEBIT is used to enter irregular debit items such as interest payable, bank charges etc. Entry is similar to the above.

Orders

This option is used to add, edit, delete or find a standing order on the account. When ORDERS is selected, a new menu is displayed containing the following items:

NEW / FIND / EDIT / DELETE / END

New

When the NEW option is selected from the ORDERS menu, you are prompted for a description (up to 16 characters) of the standing order item. Press the EXE key and enter the amount of the order. Press the EXE key again and you will be prompted to indicate whether the item is a regular CREDIT or DEBIT. Press the  C  key for a credit, e.g. salary, or the  D  key for a debit, e.g. a mortgage payment.

You are then prompted for the day of the month on which the order will be credited or debited to the account. Following this, you are returned to the menu.

Note: The programs automatically update the bank transaction files daily, crediting or debiting standing orders on the correct day of the month from the standing order file.

For example, if your salary of 752.95 is credited to your account on the 27th of each month, then if that figure is entered as a credit standing order, that amount will be added to the account on the correct day.

The addition will be recorded in the transactions file and the balance automatically updated.

Find / Edit / Delete / End

The other options in this menu allow you to FIND, EDIT and DELETE standing orders respectively, and to return to the BANK menu.

FIND operates exactly like the top-level FIND in the main menu (see also above) allowing you to examine all standing orders or find one particular entry. The search clue will operate on any of the fields in the file, the day, amount or the description.

When a particular record is found, that record may be edited by pressing the MODE key. Any found record may be deleted by pressing the DEL key while the record is displayed.

Archive

At the end of the year or half yearly period, you may wish to archive the bank file to a Datapak, where it can be stored as a historical record and kept as a read-only file. This is achieved with the ARCHIVE option from the BANK menu. One 64 Kbyte Datapak will hold typically six years' transactions and standing orders at an average of 30 transactions a month.

When the ARCHIVE option is selected from the BANK menu, the screen will first show the message:

Bank File Stored For Read Only

The screen will then prompt you to Confirm that you wish to archive the current bank transaction file with the message:

CONFIRM Y/N  

Press the  Y  key to continue, or the  N  key to return to the BANK menu. Should you decide to continue, a menu will be displayed containing the following options:

PACKB / PACKC / DELETE

You may now select the destination for the archived file. Devices B: and C: are valid, allowing a Datapak to be used for the permanent record. The internal memory of the machine (A:) is not allowed as an archive destination for obvious reasons.

If device B: or C: is selected as the destination for the archived file, then the whole file is saved to that device under the name BANKAR.

The DELETE option is included to allow you to delete the transaction file, should you so wish. It is not recommended that you use this facility.

After the ARCHIVE option has been used, the NEW option must be selected from the BANK menu to set up a new transaction file. The opening balance must then be set to correspond to the closing balance in the account at the time of archiving.

Printer

This option allows the contents of the Expenses file to be listed to a printer. Any serial printer may be connected to the Organiser via the RS232 Communications Pack plugged into the Organiser's peripheral port at the top of the machine.

You enter start and end dates (see Chapter 2) and a full statement of account is then listed to the printer in tabular form. The headings used are: Date, Description, Category, Cheque No., Payment, Receipt, Balance and CR/OD.

The Category heading will have one of the following entries: Cheque, Standing Order, Debit/Credit, Opening Balance, Closing Balance.

End

This option ends the use of the BANK option and returns you to the FINANCE menu.


4
NPV—NET PRESENT VALUE

Business and investment demand the use of capital outflows in the hope of later capital inflows. There are a number of criteria commonly used to estimate the merit or worth of such an investment. The two most common criteria are Net Present Value (NPV) and Internal Rate of Return (IRR — see next chapter).

The Net Present Value puts a current capital value to the discounted cash flows, both in and out, of such an investment where a "going" interest rate is assumed. IRR, on the other hand, answers the question, "What is the effective percentage rate of return of the investment given that the present value prior to the start of the investment is zero."

The NPV option from the Finance menu provides a program to evaluate the Net Present Value of a series of discounted cash flows for a given interest rate. To do this, a one-dimensional spreadsheet of up to 100 cells wide is constructed. This is then used to calculate the NPV from the cash receipts and payments entered into the cells. The Internal rate of Return may also be calculated from the same set of figures. This is the interest rate {expressed as a percentage) at which the cashflows specified would represent a profitable investment. For details of the IRR option from the Finance menu, see below.

When the NPV option is selected from the Finance menu, you are first prompted to enter the number of months in between cash flows. This may be any number between 1 and 47. After typing in the number, press the EXE key. The screen will then show the message:

FOR CASH IN +ve FOR CASH OUT -ve

Followed by the message:

ENTER AMOUNTS   -USE CURSOR KEYS

The one-dimensional spreadsheet is then displayed on the bottom line of the screen, The bottom line shows the contents of the first three cells, (initially zero) and the top line shows the message:

use ←→ MODE=end

As the message indicates, you may now use the cursor keys to view and edit the contents of the cells of the spreadsheet. Use individual presses of the LEFT or RIGHT cursor keys to move one cell at a time, or hold the cursor keys down to move quickly along the row of cells. To enter positive numbers (receipts), just position the cursor in the appropriate cell and type the number. To enter negative numbers (payments), preface the number with a minus sign. Each cell in the sheet is four spaces wide, allowing entries up to plus or minus 9999 to be made. These figures may represent pounds, hundreds, thousands, millions or whatever multiple suits the size of your application.

Enter numbers in the cells and move to the right and left by using the cursor keys. The contents of any cell may be edited by returning to it and entering a new value. When the cursor is moved to any cell other than the leftmost one, the display changes to show the cell numbers on the top line of the screen.

The spreadsheet is 99 cells wide, so even if the cashflows are calculated on a monthly basis, an eight year projection can be made.

If there is no in or outflow of cash in any month then that cell is left containing zero. When all of the cashflows have been entered, press the MODE key. The screen will then show:

ENTER INTEREST  RATE % _

You may now enter an interest rate between -50 and 150 per cent. Numbers outside this range will be ignored.

When the interest rate has been entered, the NPV of the figures entered will be calculated and displayed on the screen. So a large result means that an investment is profitable and a small, or even worse — negative, number means that an investment is not profitable. The screen will look something like this, depending upon the result returned:

NET PRESENT VAL. = 360

This will remain on the screen until you press any key. The display will then show a menu containing the following options:

ENDEnd use of NPV option and return to Finance menu
NPV-NEW%Enter new interest rate for the same set of figures
EDITEdit the values in the spreadsheet for a 'what-if' operation
IRRCalculate the Internal rate of Return for the figures in the spreadsheet.

The last item on this menu, IRR, operates in a similar way to the IRR option from the Finance menu. For more details on IRR, see the next chapter.

The other items on this menu, as the descriptions above show, allow you to return to the Finance menu, change the interest rate for the same set of figures in the spreadsheet or edit the cashflow values.


5
IRR—INTERNAL RATE OF RETURN

The IRR option from the Finance menu, is a sophisticated facility which operates in the same way as the NPV option (see previous chapter) up to the point at which the net present value is calculated for the figures entered in the spreadsheet. At this point, you are prompted for a guess at the outcome of the IRR calculation. (The IRR is the interest rate which would give a net present value of zero.) The purpose of this starting value is to allow for the possibility of multiple solutions for the cashflows entered.

In some unusual situations, the IRR is not a unique solution and several solutions are possible. This is particularly the case when an investment involves a series of negative, positive and then more negative and positive cashflows.

If the same solution is given for a number of estimates of the IRR for your set of cashflows then there is just the one, real, solution. If, however, more than one solution is given, for example 8% and 48%, then a more careful analysis is required to isolate the commercial significance. The next step is to construct a graph of NPV against interest rate for the current set of cashflows. The most suitable and commercially sensible solution can then be selected.

When you have entered any guess of the IRR, the program will calculate the result and the screen will look something like this, depending upon the value returned:

INTERNAL RATE OF RETURN= 23 %

At this point, press any key to go to the same menu as appears in the NPV option:

END / NPV-NEW% / EDIT / IRR

These options may be used to return to the Finance menu, calculate the NPV of the values currently in the spreadsheet, edit those values, calculate a new IRR on the existing data.


6
COMPOUND

When the COMPOUND option is selected from the Finance menu, a menu is displayed which contains the following five items:

VALUE Capital flow at start of period
FUTURE Capital flow at end of period
PAYMENT Amount of regular payments
DURATIONThe length of the period of the calculation in years
INTERESTThe interest rate as a percentage

Any of these items can be calculated from the other four, so, for instance, to calculate the future value of an investment given the present (starting) value, the amount of each regular payment, the number of years over which the payments are spread and the interest rate.

When you select one of these items, the values of the other four variables are requested. The value of the selected item is then calculated from the given information. As in the other facilities offered by the Finance pack, the convention is that cash in (whether capital or payment) is positive while cash out is treated as negative.


7
BOND

The BOND option from the Finance menu is used to evaluate the redemption yield of a government or corporate gilt, or bond stock.

When you select the BOND option, the screen first shows the message:

EVALUATES GROSS  REDEMPTION YIELD

You are then prompted for the coupon, i.e. the yield or interest amount, with the screen:

TYPE ANNUAL   COUPON %? _

Type the interest amount and press the EXE key. The next item required by the program is the market price which changes on a daily basis. The screen will show:

MARKET PRICE   ? _

Type in the market price in decimal form, for example 107.50, and press the EXE key. You are then prompted for the number of days to the next coupon:

DAYS TO NEXT   coupon? _

Type in the number of days and press the EXE key. Next you must enter the number of whole half-years until the capital is repaid:

INTEGER HALF YRS TO REDEEM? _

Given all of these values, the program then calculates the real rate of return offered by the bond. The screen will look something like this, depending upon the values entered:

REDEMPTION YIELD = 8.63 %

You may now press any key to return to the Finance menu.


8
MORTGAGE

The MORTGAGE option from the Finance menu calculates the mortgage payments payable, given the amount of the loan, the interest rate and the term of the loan. Initially the screen shows the message:

EVALUATE MONTHLY MORTGAGE PAYMENT

The screen then prompts for the amount of the loan with the message:

ENTER AMOUNT OF LOAN _

Enter the amount of the loan and press the EXE key, and the screen will prompt for the current interest rate:

INTEREST RATE %  ? _

When the interest rate has been entered, press the EXE key again and the screen will prompt you for the term of the mortgage in years with the message:

ENTER TERM IN  YEARS ? _

When this figure has been entered, the screen will display a menu containing the items:

BUILDING-SOCIETY / BANK / OTHER

You should now use the cursor keys and the EXE key to select one of these options, depending upon the source of the loan. The distinction between the building societies, banks and other loan institutions arises from the different treatment of compound interest by the building societies. The latter charge the full interest on the principal at the beginning of the year and only reduce the principal at the end of each year. The total interest and repayment for the year are simply divided by 12 to give the monthly mortgage payment. Other financial institutions usually reduce the principal on a monthly basis.

The monthly payment will be displayed on the screen thus:

MONTHLY PAYMENT  328.74

You may now press any key to return to the Finance menu.


9
APR

Interest rates on loans and hire purchase transactions may be quoted as a percentage per month, rather than as an annual rate. It is therefore sometimes not obvious which of two quoted interest rates offers the best deal on a particular investment or purchase. The way around this is to calculate an APR (Annual Percentage Rate) for each quoted figure and compare the two. The APR is a comparative measure of the interest rates on an annual basis, and standardises quotations of interest rates.

The APR option in the Finance menu allows you to do this quickly and easily. When selected from the menu, the screen first shows the message:

INTEREST TO APR 

You are then prompted for the length of the payment period in months by the screen:

PAYMENT PERIOD   IN MONTHS

You may now type in the number of months, after which you will be prompted for the interest for that period, e.g. month, quarter etc:

INTEREST ON   PERIOD

Now when you enter the monthly rate, say 1.75%, the APR is calculated and displayed on the screen. Press any key to return to the Finance menu.