Calculator – help for the Miller Orr Model (example 3)

Or a key with a X to the power of y on it? It actually written x^y in the calculator included with MS windows. If this is the case you enter the number hit the x^y key then enter -3 and hit =

I’m not suggesting they use a PC just explaining a very common way roots above the squared roots are computed on a scientific calculator. Neither the HP, Casio or TI scientific calculators have a key as you describe in all of these you must use the” to the power off key” and then a negative 3 to get a cubed root.

I’m assuming that since they’re posting on here they are most likely on a MS Windows PC and would therefore be able to check this out immediately using the inbuilt calculator – so they would know what to look for on an actual scientific calculator.

@ joannemcdonnell what you can do is put it on the calculator like this:

(3/4 x transaction cost x variance of cash flows)^(1/3)
…and then the figure you get, you multiply it by 3

for instance in example 3:
(3/4 x 5 x 2000² ÷ 0.00014)^(1/3) = 4750
…then you take 4750 and multiply it by 3, you will obtain 14250

John I’m also having problem with entering the formula into my calculator, I have a Casio fx-83GT PLUS

I have my exam coming up on Wednesday and it would be really helpful to know which buttons to hit and which order!

I’m doing a different question, where the details are as follows:

Transaction cost is $30
Variance of cash flow is $270,000
Daily interest rate is 0.025%

I think it’s just the 1/3 that’s throwing things out, not sure which button to press!

The spread should come out to $8,689

I hope you can help John

Regards

Neville

Hey guys,

as u mentioned the issue is coming from the 1/3 .
therefore instead of putting the fraction to the power, just mention the decimal amount of 1/3 (which is 0.333333333 (up to 9 decimal point)

This way you will definetly get the answer from calculator

if we work out ur question here;

step one: (0.75*30*270,000/0.00025) ^ 0.333,333,333 =2,896.46131
step two: 2,896.46131 * 3 = 8,689.404392
round- off : 8689

Hope the above details helped your confusion 🙂 g00dluck