60 Section 4: Additional Financial Functions
Note: The initial investment can not be zero.
3. Key in the amount of the next cash flow, press Þ if the cash flow is
negative, then press gK. If the cash flow amount is zero in the next
period, press 0 gK.
4. Repeat step 3 for each cash flow until all have been entered.
With the amounts of the cash flows stored in the calculator’s registers, you can
calculate NPV as follows:
1. Enter the interest rate, using ¼ or C.
2. Press fl.
The calculated value of NPV appears in the display and also is automatically
stored in the PV register.
Example: An investor has an opportunity to buy a duplex for $80,000 and would
like a return of at least 13%. He expects to keep the duplex 5 years and then sell
it for $130,000; and he anticipates the cash flows shown in the diagram below.
Calculate NPV to determine whether the investment would result in a return or a
loss.
Note that although a cash flow amount ($4,500) occurs twice, these cash flows
are not consecutive. Therefore, these cash flows must be entered using the
method described above.
Keystrokes Display
fCLEARH
0.00
Clears financial and storage
registers.
80000ÞgJ
–80,000.00
Stores CF
0
(with minus sign for a
negative cash flow).
500ÞgK
–500.00
Stores CF
1
(with minus sign for a
negative cash flow).
4500gK
4,500.00
Stores CF
2
.
5500gK
5,500.00
Stores CF
3
.
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