CFALA
Review:
Tips
for
using
the
TI
calculator
2/9/2015
By
David
Cary
10
CFA Society Los Angeles
19
NPV, IRR EXAMPLE
• Assume a project costs $1,000. It will generate
cash flows of $100, $200, $400, $600 for the next
4 years
1
. The discount rate is 10%. Calculate NPV
and IRR.
• CF
0
=
1000, CF
1
= 100, CF
2
= 200,
CF
3
= 400, CF
4
= 600, I = 10%
• NPV =
33.47
• IRR = 8.79%, note NPV < 0, IRR < discount rate.
1
Like the previous example, except for initial cost.
19
CFA Society Los Angeles
20
NPV & IRR OF UNEVEN
CASH FLOWS
Key Strokes
Explanation
Display
[CF] [ 2nd ] [ CLR WORK ]
Clear CF Registers
CF0 = 0.00
1000 [+/-] [ Enter ]
Initial Outflow
CF0 = -1000.00
100 [ Enter ]
Enter CF1
C01 = 100.00
200 [ Enter ]
Enter CF2
C02 = 200.00
400 [ Enter ]
Enter CF3
C03 = 400.00
600 [ Enter ]
Enter CF4
C04 = 600.00
[ NPV ] 10 [ Enter ]
Enters Interest Rate
I = 10.00
[ CPT ]
Calculate NPV
NPV = -33.47
[ IRR ] [CPT]
Calculate IRR
IRR = 8.79
To get FV, [CE/C]
(display = -33.47)
[PV]
(enters -33.47 as PV)
10 [I/Y]
(enters 10% interest)
4 [N]
(enters 4 years)
[CPT] [FV]
(Display = 49.00) This is actually a negative FV
I = 10%, CF
0
= -1000, CF
1
= 100,
CF
2
= 200, CF
3
= 400, CF
4
= 600
X
With TI-BAII+Pro
After NPV,
,
NFV, [CPT],
NFV = -49.00
