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HP 95LX - Page 52

HP 95LX
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In
this
display,
you'll
see
these
values:
NPY
is
the
Net
Present
Value—the
value
of
all
cash-flows
in
the
invest-
ment
discounted
at
the
user-specified
periodicinterest
rate
(1
4=18).
NUS
is
the
Net
Uniform
Series—the
size
of
uniform
cash-flows
that
would
be
equivalent
to
the
NPV
of
the
current
list
of
uneven
cash-flows.
NFY
is
the
Net
Future
Value—the
future
value
of
the
NPV
at
the
end
of
the
current
cash-flow
scenario—assuming
that
it
is
invested
at
the
user-specified
periodic
interest
rate
(I1%=18).
TOTAL
is
the
raw
sum
of
all
of
the
cash-flows
(with
no
discounting).
IRR
Calculates
the
Internal
Rate
of
Return—the
periodic
interest
rate
at
which
the
NPV
of
the
cash-flows
equals
zero.
I%
is
the
periodic
interest
(discount)
rate
that
the
you
specify
that
the
NPV
calculation
use.
Because
you
haven't
yet
specified
any
rate,
the
default
rate
of
10%
is
used.
Modify
the
periodic
interest
rate (1%)
to
better
reflect
reality.
The
periods
used
in
this
scenario
are
months
and
a
monthly
discount
rate
of
10%
is
not
realistic.
This
is
why
all
the
analytic
measures
(NPV,
NUS,
NFV)
are
negative.
Divide
10%
by
12
to
get
a
proper
monthly
rate:
0.833%.
Now
enter
0.833
as
1%,
by
pressing
(-J8]3]3)([ENTER).
Much
better:
At
a
discount
rate
of
10%
per
year,
This
cash-flow
scenario
has,
a
positive
NPV
and
is
equivalent
to
receiving
$63.98
at
the
end
of
each
of
the
next
eight
months—with
noinitialinvestment
at
all.
The
IRR
is
1.1294246629%
per
month
or
13.55%
per
year.
Thisis
the
breakeven
point:
as
long
asthe
actual
discount
rate (I%)
is
less
than
the
IRR,
the
investment’s
IRR
will
be
positive.
Plotting
the
Cash-Flow
Scenario
If
you
want
to
see
a
visual
display
of
the
current
cash-flow
scenario
in
—CFLOMW,
you
have
three
choices:
Display
a
bar
graph
of
the
cash-flows:
press
.
Display
a
plot
of
the
NPV
versus
1%:
press
(ALT
}H{P).
The
macro
asks
you
to
enter
a
starting
value
for
1%
and
the
increment
between
each
point
on
the
plot.
Use
the
Graph
feature
of
Lotus
to
design
your
own
display
(see
pages
76-79).
After
finishing
view
a
graph
or
plot,
press
to
return
to
the
main
worksheet.
52
2.
ANALYZING
INFORMATION

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