Instructions for Using the Casio FC range of Business/Financial Calculators

Transcription

1 Instructions for Using the Casio FC range of Business/Financial Calculators These instructions are based on the Casio FC-100 Financial Consultant calculator, and may vary slightly with different models. Digits or letters in blocks represent the keys on the calculator to be struck. Topic A: Net Present Value Consider the following information: o Investment: R o Income for Year 1: R o Income for Year 2: R o Income for Year 3: R o Income for Year 4: R o Income for Year 5: R Topic A, Step 1: Clearing the Memory In order to effectively perform financial calculations the calculator's memory must be cleared of all data. This is achieved as follows: 0 Min and then SHIFT AC Topic A, Step 2: Establish "Financial Mode" In order to perform financial calculations, the calculator must be in CF mode. To establish CF mode: MODE and then 4 - CF will appear at the top of the screen. Additionally, the Casio FC-100 allows for years with 360 or 365 days for financial calculations. In South Africa we use 365 days, whereas the USA makes use of a 360 day financial year. To establish a 365 day year: MODE and then 7 - nothing additional appears on the screen. Only if you use the 360 day financial year will a 360 appear at the top (i.e. MODE and then 8 - if you have experimented with this, please ensure that you revert to the 365 day financial year, as follows MODE and then 7) Prepared by: Norwin Lederer Casio FC-100 Financial Consultant Page 1 of 8

2 Topic A, Step 3: Enter the Data / - CFj CFj CFj CFj CFj CFj Topic A, Step 4: 12% To establish the NPV for the abovementioned data at 12% perform the following actions: 12 i% 12 NPV wait Therefore the NPV at 12% for the above data is R Topic A, Step 5: 20% Should you have to calculate the NPV at 20% for the abovementioned data, simply perform the following: 20 i% 20 NPV wait Therefore the NPV at 20% for the above data is -R Bear in mind that you must not clear the memory (i.e. Step 2) to perform an NPV calculation, as this will erase all the data that you entered in Step 3. If your calculator's Auto Off feature has activated before you have performed the NPV calculation you will have to perform Steps 1 to 3 again. Prepared by: Norwin Lederer Casio FC-100 Financial Consultant Page 2 of 8

3 Topic A, Step 6: 5% Should you have to calculate the NPV at 5% for the abovementioned data, simply perform the following: 5 i% 5 NPV wait Therefore the NPV at 5% for the above data is R Topic A, Step 7: Determining the IRR In order to calculate the IRR no interest rate needs to be entered, i.e. Steps 4, 5 and 6. However, the likelihood is quite great that you are calculating NPV's over a range of interest rates and the IRR. The data from Step 3 should still be resident in the calculator's memory; if not, re-perform Step 3. IRR long wait Therefore the IRR is 12%. Topic B: Discount Factor / DCF The following are the steps to establishing the DCF. Bear in mind that if you are performing a NPV or IRR on a financial calculator it is unnecessary to determine the DCF, as the calculator automatically performs these functions in its memory. Consider the following question: o What is the discount factor in the 8 th year of an investment where the interest rate is 5%? Firstly, let's consider the formula: 1 DCF = n (1 + i) where i = interest rate & n = period 1 therefore DCF = 8 ( ) Note: 5% is equal to 0.05 or 5/100. Prepared by: Norwin Lederer Casio FC-100 Financial Consultant Page 3 of 8

4 To perform this on the calculator do the following: = 1.05 SHIFT = SHIFT Min Therefore the DCF for the 8 th year at an interest rate of 5%, to four decimal points, is Example 2: o What is the discount factor in the 2 nd year of an investment where the interest rate is 5%? = 1.05 SHIFT = SHIFT Min Therefore the DCF for the 2 nd year at an interest rate of 5%, to four decimal points, is Prepared by: Norwin Lederer Casio FC-100 Financial Consultant Page 4 of 8

5 Example 3: o What is the discount factor in the 5 th year of an investment where the interest rate is 15%? Note: 15% is equal to 0.15 or 15/ = 1.15 SHIFT = SHIFT Min Therefore the DCF for the 5 th year at an interest rate of 15%, to four decimal points, is (not the rounding off is upwards, because the fifth digit is greater than 5). Prepared by: Norwin Lederer Casio FC-100 Financial Consultant Page 5 of 8

6 Topic C: Instalments Example 1 Consider the following information: o Purchase price of the car: R (Known as 'principle') o Interest rate: 13.5% (Known as 'interest rate' or 'lending rate') o Number of years to pay: 5 years (Known as 'period') Topic C, Step 1: Clearing the Memory In order to effectively perform financial calculations the calculator's memory must be cleared of all data. This is achieved as follows: 0 Min and then SHIFT AC Topic C, Step 2: Establish "Financial Mode" In order to perform financial calculations, the calculator must be in CF mode. To establish CF mode: MODE and then 4 - CF will appear at the top of the screen. Additionally, the Casio FC-100 allows for years with 360 or 365 days for financial calculations. In South Africa we use 365 days, whereas the USA makes use of a 360 day financial year. To establish a 365 day year: MODE and then 7 - nothing additional appears on the screen. Only if you use the 360 day financial year will a 360 appear at the top (i.e. MODE and then 8 - if you have experimented with this, please ensure that you revert to the 365 day financial year, as follows MODE and then 7) Prepared by: Norwin Lederer Casio FC-100 Financial Consultant Page 6 of 8

7 Topic C, Step 3: Enter the Data / PV FV SHIFT i% i% SHIFT n 60 n 60 COMP PMT Therefore the instalment on a car, where the initial purchase price is R , the interest rate is 13.5% and the number of years is 5 is R Example 2 Consider the following information: o Purchase price of the house: R (Known as 'principle') o Interest rate: 13.5% (Known as 'interest rate' or 'lending rate') o Number of years to pay: 20 years (Known as 'period') Topic C, Step 1: Clearing the Memory In order to effectively perform financial calculations the calculator's memory must be cleared of all data. This is achieved as follows: 0 Min and then SHIFT AC Prepared by: Norwin Lederer Casio FC-100 Financial Consultant Page 7 of 8

8 Topic C, Step 2: Establish "Financial Mode" In order to perform financial calculations, the calculator must be in CF mode. To establish CF mode: MODE and then 4 - CF will appear at the top of the screen. Additionally, the Casio FC-100 allows for years with 360 or 365 days for financial calculations. In South Africa we use 365 days, whereas the USA makes use of a 360 day financial year. To establish a 365 day year: MODE and then 7 - nothing additional appears on the screen. Only if you use the 360 day financial year will a 360 appear at the top (i.e. MODE and then 8 - if you have experimented with this, please ensure that you revert to the 365 day financial year, as follows MODE and then 7) Topic C, Step 3: Enter the Data / PV FV SHIFT i% i% SHIFT n 240 n 240 COMP PMT Therefore the instalment on a house, where the initial purchase price is R , the interest rate is 13.5% and the number of years is 20 is R Prepared by: Norwin Lederer Casio FC-100 Financial Consultant Page 8 of 8