HP 12c Platinum - Appendix C: more about L

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Appendix C
More About L
Given a sequence of positive and negative cash flows, we hope that there is
enough information to determine whether an IRR answer exists, and what that
answer is. For the vast majority of cases, your HP 12C Platinum will find the
unique IRR answer if it exists. But the IRR computation is so complex that if the
cash flow sequence does not meet certain criteria, then sometimes the calculator
is unable to determine whether or not an answer or answers exist.
Let’s look at all of the possible outcomes of IRR as calculated by your HP 12C
Platinum:
Case 1: A positive answer. If a positive answer is displayed, it is the only such
answer. One or more negative answers may also exist.
Case 2: A negative answer. If a negative answer is displayed, there may be addi-
tional negative answers, and there may be a single positive answer. If additional
answers (negative or positive) exist, they can be calculated using the procedure
described below.
Case 3: The calculator displays Error 3. This indicates that the computation is
very complex, possibly involving multiple answers, and cannot be continued
until you give the calculator an estimate of IRR. The procedure for doing so is
described below.
Case 4: The calculator displays Error 7. This indicates that there is no answer to
the computation of IRR with the cash flow amounts you have entered. This situa-
tion is probably the result of a mistake in entering the magnitudes or signs of the
cash flows or the number of times a cash flow amount occurs consecutively.
Refer to Reviewing Cash Flow Entries (page 64) and Changing Cash Flow
Entries (page 66) to check and correct the entries. Error 7 will result if there is
not at least one positive cash flow and at least one negative cash flow.
Although the calculator will eventually reach one of the above outcomes, it may
take a long time to get there. You may wish to terminate the IRR iterative pro-
cess, by pressing any key, to see what interest rate the calculator has computed at
that point. If you stop the calculation, you may continue searching for IRR as
described below.
Searching for IRR. You can continue searching for IRR solutions, even after an
Error 3 indication, as follows:
1. Make a guess for the interest rate and key it in.
2. Press:gt.