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NPV using TI BA II plus

With this tutorial on Texas Instruments BA II Plus, you will learn how to find net present value of an annuity with constant and uneven cash flows

NPV Example with constant cash flows

We will illustrate how you can use TI BA II Plus to find net present value with an annuity that has constant payment. Let's assume Sears Corporation purchased a machinery for $7,000 it will save company $3,000 annually for next 5 years. The company's cost of capital is 12%. How do we find the net present value with TI BA II Plus

NPV Step by Step using TI BA II Plus

To Press Display
Set all variables to default 2nd reset enter RST 0.00
Select Cash Flow worksheet. CF CF0= 0.00
Enter initial cash flow. 7000 +/- ENTER CF0= -7000.00
Enter cash flow for years 1 to 5
3000
5
ENTER
ENTER
C01=
F01=
3000.00
5
Access interest rate variable NPV I= 0.00
Enter interest rate per period. 12 ENTER I= 12.00
Compute net present value. CPT NPV= 3814.33

NPV Example with uneven cash flows

A four year financial project has net cash flows of $20,000; $25,000; $30,000, and $50,000 in the next four years. It will cost $75,000 to implement the project. If the required rate of return is 20%, conduct a discounted cash flow calculation to determine the net present value (NPV).

NPV Step by Step using TI BA II Plus

To Press Display
Set all variables to default 2nd reset enter RST 0.00
Select Cash Flow worksheet. CF CF0= 0.00
Enter initial cash flow. 75000 +/- ENTER CF0= -75000.00
Enter cash flow for year 1
20000 ENTER C01=
F01=
20000.00
1
Enter cash flow for year 2
25000 ENTER C02=
F02=
25000.00
1
Enter cash flow for year 3
30000 ENTER C03=
F03=
30000.00
1
Enter cash flow for year 4
50000 ENTER C04=
F04=
50000.00
1
Access interest rate variable NPV I= 0.00
Enter interest rate per period. 20 ENTER I= 20.00
Compute net present value. CPT NPV= 501.54

Finding NPV in Excel

=tadNPV( rates, inflation, tax_rates, cashflows, adjust_for_inflation, frequencies, types, compoundings, periods, concentrations, hair_cuts, rate_rigged_by )