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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 | CF_{0}= |
0.00 | ||

Enter initial cash flow. | 7000 | +/- | ENTER | CF_{0}= |
-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 | CF_{0}= |
0.00 | ||

Enter initial cash flow. | 75000 | +/- | ENTER | CF_{0}= |
-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 | |