Groundlearn / BA II Plus / Uneven cash flows: NPV and IRR

BA II Plus NPV and IRR: cash flow worksheet keystrokes

Capital budgeting, private equity cash flows and money-weighted returns.

The keys

CF2NDCLR WORK	Opens the cash flow worksheet and clears it.
valueENTER↓	CF0 is the initial flow, usually negative.
valueENTER↓countENTER↓	Each C0n with its frequency F0n (default 1).
NPVrateENTER↓CPT	NPV at the discount rate in percent.
IRRCPT	IRR from the same cash flows.

Worked example

A project costs 1,000 and returns 300, 400 and 500 over three years. Discount rate 10%.

CF2NDCLR WORK	Clear.
1000+/−ENTER↓	CF0 = −1,000.
300ENTER↓↓	C01 = 300, F01 = 1.
400ENTER↓↓	C02 = 400.
500ENTER	C03 = 500.
NPV10ENTER↓CPT	NPV = −21.04.
IRRCPT	IRR = 8.90%.

NPV = −21.04 and IRR = 8.90%, so reject at 10%

The trap

Use [+/−] for a negative, not the minus key, which subtracts. And clear the worksheet: old C0n values linger and silently change the answer.

Watch it on the calculator

From our BA II Plus keystrokes video (starts at this step). Open on YouTube.

The terms behind it

Net present valueThe present value of a project’s cash inflows less the present value of its outflows.
Internal rate of returnThe discount rate at which a project’s NPV is zero.
Money-weighted returnThe IRR of a portfolio including the timing and size of every contribution and withdrawal.

More BA II Plus keystrokes

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BA II Plus time value of money (TVM): keystrokes and a worked exampleAnnuities, loans, bond prices and retirement problems in every level.
BA II Plus annuity due: BGN mode keystrokes and the trapLeases, rent, insurance premiums and retirement withdrawals that begin today.
BA II Plus effective annual rate: the ICONV worksheetComparing quoted rates with different compounding, and EAR questions.
BA II Plus loan amortization: interest and principal for any yearMortgage payments, interest and principal splits, and outstanding balances.
BA II Plus mean and standard deviation: the DATA and STAT worksheetsSample statistics on returns in Quantitative Methods.
BA II Plus bond price from yield: keystrokes and the semi-annual trapFixed income pricing at every level, using the TVM keys.

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