# BA II Plus. Guidebook. Texas Instruments Instructional Communications. Dave Caldwell David Santucci Gary Von Berg

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1 BA II Plus Guidebook Guidebook developed by: Texas Instruments Instructional Communications With contributions by: Dave Caldwell David Santucci Gary Von Berg 1997 by Texas Instruments Incorporated.

2 Important Texas Instruments makes no warranty, either expressed or implied, including but not limited to any implied warranties of merchantability and fitness for a particular purpose, regarding any programs or book materials and makes such materials available solely on an as-is basis. In no event shall Texas Instruments be liable to anyone for special, collateral, incidental, or consequential damages in connection with or arising out of the purchase or use of these materials, and the sole and exclusive liability of Texas Instruments, regardless of the form of action, shall not exceed the purchase price of this calculator. Moreover, Texas Instruments shall not be liable for any claim of any kind whatsoever against the use of these materials by any other party. ii

3 Table of Contents Chapter 1: Overview of Calculator Operations... 1 Turning the Calculator On and Off... 2 Using the Keys... 2 Understanding the Display... 3 Clearing the Calculator... 4 Correcting Entry Errors... 5 Math Operations... 6 More on Selected Math Operations... 8 Memory Operations... 9 Constant Calculations Setting the Format for Number of Decimal Places Setting the Format for Angle Units Setting the Format for Dates Setting the Format for Separators Setting the Format for Calculation Method The Last Answer Feature Resetting the Calculator Using Worksheets: Tools for Financial Solutions Types of Worksheets Types of Worksheet Variables Chapter 2: Using the Time-Value-of-Money and Amortization Worksheets Entering Inflows and Outflows Steps in a TVM Calculation Steps in an Amortization Calculation Example: TVM/Amortization Application Chapter 3: Using the Cash Flow Worksheet Uneven and Grouped Cash Flows Entering Cash Flows Deleting Cash Flows Inserting Cash Flows Computing NPV and IRR Example: Cash Flow Application iii

4 Table of Contents (Continued) Chapter 4: Using the Bond Worksheet Terminology Entering Data and Computing Results Example: Bond Worksheet Application Chapter 5: Using the Depreciation Worksheet Entering Data and Computing Results Example: Declining-Balance with Straight-Line Crossover Example: Straight-Line Depreciation Chapter 6: Using the Statistics Worksheet Background Information on the Regression Models Entering Data Editing Data Computing Results Example: One-Variable Statistics Example: Two-Variable Statistics Chapter 7: Using the Other Worksheets The Percent Change/Compound Interest Worksheet The Interest Conversion Worksheet The Date Worksheet The Profit Margin Worksheet The Breakeven Worksheet The Memory Worksheet Appendix: Reference Information Formulas Error Conditions Accuracy Information IRR Calculations The Algebraic Operating System (AOSé) Battery Information In Case of Difficulty TI Products Service and Warranty Information iv

5 CHAPTER 1 Overview of BA-II Plus Operations Keyboard Chapter 1: Overview of Calculator Operations 1

6 Turning the Calculator On and Off Turning the Calculator On When you press \$ to turn the calculator on: If you turned the calculator off by pressing \$, the calculator returns to operation in the standard-calculator mode. A value of zero is displayed and the values in all of the worksheets are the same as you left them, as are the formats for numbers, angle units, dates, separators, and calculation method. If the APDé feature turned the calculator off, the calculator, including the display and any error condition, returns exactly as you left it. Turning the Calculator Off When you press \$ to turn the calculator off: The displayed value is cleared. Any unfinished standard-calculator operation is canceled. Any worksheet calculation in progress is canceled. Any error condition is cleared. The Constant Memoryé feature retains all worksheet values and settings, including the contents of the 10 memories and all format settings. The Automatic Power Down Feature (APDé) To prolong the life of the battery, the Automatic Power Down (APDé) feature turns the calculator off automatically if you do not press any key for approximately 10 minutes. Using the Keys Primary Functions The primary function of a key is indicated by the symbol on the face of the key. Throughout the manual, primary functions are shown in boxes: ; Secondary Functions Second functions are marked above the keys. To access the second function of a key, press & before pressing the key. Throughout the manual, second functions are shown in brackets and are preceded by the & key symbol: & o 2 Chapter 1: Overview of Calculator Operations

7 Understanding the Display The display shows entries and results with up to 10 digits. The display indicators provide information about the status of the calculator and tell you what keys are available at different times. ABC represents the spaces where the three-letter abbreviations for the variable labels are displayed. Display Indicators Indicator 2nd INV HYP COMPUTE ENTER SET Meaning The calculator will access the second function of the next key pressed. The calculator will access the inverse function of the next key or key sequence pressed. The calculator will access the hyperbolic function of the next key or key sequence pressed. You can compute a value for the displayed variable by pressing %. You can enter a value for the displayed variable by keying in a value and pressing!. The displayed variable is a setting that you can change by pressing & V. # \$ You can press " to view previous variables in the current worksheet or # to view subsequent variables. DEL INS You can press & W to delete a cash flow or a statistical data point. You can press & X to insert a cash flow or a statistical data point. Chapter 1: Overview of Calculator Operations 3

8 Display Indicators (Continued) Indicator BGN RAD Meaning You have selected beginning-of-period payments for TVM calculations. If the BGN indicator is not displayed when you are in the TVM worksheet, end-of-period payments are selected. The calculator is in the radian mode. All angle values are displayed and must be entered as radians. If the RAD indicator is not displayed, all angle values are displayed and must be entered as degrees. The displayed value has been entered in a worksheet. After a computation, the indicators are cleared. The displayed value has been computed in a worksheet. If you make a change to the worksheet that invalidates a previously computed value, the indicator is removed from that value. = The displayed value is assigned to the variable represented by the label in the display. If the = indicator is not displayed, the displayed value is not assigned to the displayed variable. N The displayed value is negative. Clearing the Calculator To clear: One character at a time from the display (including decimal points). * An incorrect entry, an error condition, or an error message from the display. Out of a prompted worksheet and return to standardcalculator mode. All pending operations in the standard-calculator mode and display zero. In a prompted worksheet, a value you have keyed into the display but not yet entered as a variable value. The previous value returns. Any calculation you have started but have not yet completed. Press: P & U & U P P P P 4 Chapter 1: Overview of Calculator Operations

9 To clear: The TVM worksheet and return the values in the worksheet to a known starting point. Any prompted worksheet (not TVM) and return the values in the worksheet to a known starting point. Also returns you to the first variable in the worksheet. Press: & U & ^ & z All 10 memories. & { & z One of the 10 memories without affecting the others. Q D and the key for the number of the memory (0-9) * When you are in a prompted worksheet, pressing P repeatedly returns you to standard-calculator mode. Correcting Entry Errors If you have not yet pressed an operation key (such as H or 4) after entering an incorrect number, you can correct the number without clearing the calculation. You can remove the last digit or decimal point from a number you have keyed in by pressing the backspace key *. Then you can key in the correct digit. You can erase the entire number by pressing P once. Then you can enter the correct number and continue with your calculation. Note: Pressing P to correct a numeric entry immediately after you have pressed an operation key clears any calculation in progress. Example Calculate 3 Q , but accidentally enter.86 instead of.56. Use * to correct the mistake. Then continue with your calculation. Procedure Keystrokes Display Clear the calculator. & U 0.00 Begin the expression. 3 < 3.00 Enter the second number incorrectly , Erase the 86. * * 1,234. Complete the number. 56 1, Proceed. N 3, Math Operations When the calculation method is set to chain (Chn), mathematical expressions, such as Q 4, are evaluated in the order that you enter Chapter 1: Overview of Calculator Operations 5

10 them. The N key completes an operation and displays the result. Some operations are performed immediately and do not require that you press N. This chart shows you how to perform math operations. Operation Example Keystrokes Display Addition H 4 N Subtraction 6 N 4 6 B 4 N 2.00 Multiplication 6 Q 4 6 < 4 N Division 6 P N 1.50 Universal power ; 1.25 N 3.95 Parentheses 7 Q (3 + 5) 7 < 9 3 H 5 : N Percent 4% of \$ < 4 2 N Percent ratio Percent add-on 14 is what percent of 25? N \$ % sales tax Percent discount \$69.99 N 10% discount 498 H 7 2 N B 10 2 N Square Square root Reciprocal 1/ Factorial 5! 5 & g Natural logarithm ln > 5.32 Natural antilogarithm e & i Chapter 1: Overview of Calculator Operations

11 Operation Example Keystrokes Display Round Random number* Round 2 P 3 to the set decimal format N & o 0.67 Generate random number & a 0.86 Store seed value D & a 0.86 Combinations n = 52, r = 5 52 & s 5 N 2,598, Permutations n = 8, r = 3 8 & m 3 [=] Sine** sin (11.54 ) & d 0.20 Cosine** cos (120 ) 120 & e N0.50 Tangent** tan (76 ) 76 & f 4.01 Arcsine** sin -1 (.2).2 8 d Arccosine** cos -1 (-.5).5 S 8 e Arctangent** tan -1 (4) 4 8 f Hyperbolic sine sinh (.5).5 & c d 0.52 Hyperbolic cosine cosh (.5).5 & c e 1.13 Hyperbolic tangent tanh (.5).5 & c f 0.46 Hyperbolic arcsine sinh -1 (5) 5 & c 8 d 2.31 Hyperbolic arccosine cosh -1 (5) 5 & c 8 e 2.29 Hyperbolic arctangent tanh -1 (.5).5 & c 8 f * The random number generated when you press & a may not be the one shown here. ** Angles are interpreted according to the current setting for angle units (degrees or radians). These examples show angles in degrees Chapter 1: Overview of Calculator Operations 7

12 More on Selected Math Operations Universal Power The ; key lets you raise a positive number to any power. However, you can raise a negative number to an integer power or the reciprocal of an odd number only. In either case, the power can be either positive or negative. Parentheses Parentheses let you control the order in which a numeric expression is evaluated. The portion of an expression enclosed in parentheses is evaluated separately. Up to 15 levels of parentheses are available, with up to 8 pending operations. If an expression ends in a series of closed parentheses, you can press N to close all of the parentheses, evaluate the expression, and display the end result. To see intermediate results, press : repeatedly. Factorial To calculate the factorial of a displayed number, press & g. The number must be a positive integer 69. Random Numbers To generate a random real number between zero and one (0<x<1) from a uniform distribution, press & a. To repeat a sequence of random numbers, you must store a "seed" value in the random number generator. To store a seed value, key in an integer greater than zero and press D & a. This lets you recreate experiments by generating the same series of random numbers. Combinations The & s key sequence calculates the number of combinations of n items taken r at a time. n! ncr = ( n r)! r! Permutations The & m key sequence calculates the number of permutations of n items taken r at a time. n! n Pr = ( n r)! 8 Chapter 1: Overview of Calculator Operations

13 Rounding The round function is useful when you need to perform a calculation using the displayed form of a number rather than the unrounded value that the calculator stores internally. The decimal format setting does not round the calculator's internally stored value, only the displayed value. The round key sequence & o lets you change the internal value to match its displayed form. Internal value Before rounding Displayed value After rounding For example, in the Bond worksheet, you might want to round a computed selling price to the nearest penny (two decimal places) before continuing with your calculation. Scientific Notation If you compute a value that is larger or smaller than the calculator can display in standard decimal format, the value is displayed in scientific notation. A value in scientific notation is displayed as a base value (often called a mantissa), followed by a blank space, followed by an exponent. You cannot directly enter a number in scientific notation, but when the AOS calculation method is selected, you can use the ; key to enter a number in scientific notation. For example, for 3 Q 10 3, type 3 < 10 ; 3. Memory Operations Your calculator always has 10 memories available. The memories can hold any numeric value within the range of the calculator. The memories are numbered 0 through 9. This lets you access each memory using a single keystroke. Chapter 1: Overview of Calculator Operations 9

14 Clearing the Memories There are two ways to clear memory. Storing a zero in an individual memory effectively clears the memory (shown in Memory Examples below). To clear all of the memories simultaneously, press & { & z to clear the Memory worksheet. Store in Memory To store a displayed value to a memory (0 through 9), press D and a digit key 0 through 9. Any previous value in that memory is replaced by the new value. When you turn the calculator off, the Constant Memoryé feature retains all stored values. Recall from Memory To recall a number stored in a memory to the display, press J and a digit key 0 through 9. The number is displayed, but also remains in memory. Memory Examples Function Key Sequence Store a zero in memory 4 (effectively clears the memory). 0 D 4 Store in memory D 3 Recall a value from memory 7. J 7 Memory Arithmetic Memory arithmetic allows you to perform a calculation on a stored value and then store the result with a single operation. Memory arithmetic does not change the displayed value, only the value in the affected memory. Memory arithmetic does not complete any calculation in progress. The table on the next page shows the memory arithmetic functions available with the calculator. In each case, the result is stored in the specified memory. 10 Chapter 1: Overview of Calculator Operations

15 Each of these examples assumes that a value is already in the display. Function Add the value in the display to the value in memory 9. Key Sequence D H 9 Subtract the value in the display from the value in memory 3. D B 3 Multiply the value in memory 0 by the value in the display. D < 0 Divide the value in memory 5 by the value in the display. D 6 5 Raise the value in memory 4 to the power of the displayed value. D ; 4 Constant Calculations The constant key sequence & ` stores a number and an operation for use in repetitive calculations. After you store the constant, you can use it in subsequent calculations by entering a new value and pressing N. The constant is cleared when you press any key other than a numeric entry key or N. Example: Multiply 3, 7, and 45 by 8. Procedure Keystrokes Display Clear calculator. & U 0.00 Begin first calculation. 3 3 Store x and 8 in constant register. < & ` 8 N Calculate 7 Q 8. 7 N Calculate 45 Q N Chapter 1: Overview of Calculator Operations 11

16 Constant Key Sequences The following table shows how to set the constant for addition, subtraction, multiplication, division, universal power, and percent. The constant value is denoted by c. Key Sequence n H & ` c N n B & ` c N Function Adds c to each subsequent entry. Subtracts c from each subsequent entry. n < & ` c N Multiplies each subsequent entry by c. n 6 & ` c N Divides each subsequent entry by c. n ; & ` c N Raises each subsequent entry to the power of c. n H & ` c 2 N Adds c% of each subsequent entry to that entry. n B & ` c 2 N Subtracts c% of each subsequent entry from that entry. Repeat constant calculations with n N. Setting the Format for Number of Decimal Places The calculator internally stores numeric values to an accuracy of 13 digits. You can specify the number of decimal places to be displayed. The default is two decimal places, rounding if necessary. The decimal format setting affects only the display; it does not round the internal value, except for amortization and depreciation results. To round the internal value, use the round function. Note: Examples in this guidebook assume a setting of two decimal places. Other settings may show different results. Procedure: Changing the Decimal Format 1. Press &. DEC is displayed, indicating the current decimal-place setting. 2. Enter the number of decimal places to be displayed (0 through 9) and press!. To specify a floating-decimal format, enter Choose one of the following to continue: To continue setting formats, press #. To return to the standard-calculator mode, press & U. To access another prompted worksheet, press the appropriate worksheet key or key sequence. 12 Chapter 1: Overview of Calculator Operations

17 Setting the Format for Angle Units You can enter and display angle values in either degrees or radians. You can specify which method you require. The default setting for angle units is degrees. There is no display indicator for this setting. However, if you specify radians, the RAD indicator is displayed in the upper right-hand corner of the display. Procedure: Changing Angle Units 1. Press [2nd] [Format] [*]. The most recently selected angle-units format is displayed, either DEG or RAD. 2. Press & V repeatedly to set either DEG or RAD. 3. Choose one of the following to continue: To continue setting formats, press # or ". To return to the standard-calculator mode, press & U. To access another prompted worksheet, press the appropriate worksheet key or key sequence. Setting the Format for Dates Both the Bond and Date worksheets use dates. You can select either the U.S. or the European display format. The default setting for dates is the U.S. format. Month Day Year U.S. format (US): European format (EUR): Day Month Year Procedure: Changing the Date Format 1. Press & # #. The most recently selected date format is displayed, either US or EUR. 2. Press & V repeatedly to select either US or EUR. 3. Choose one of the following to continue: To continue setting formats, press # or ". To return to the standard-calculator mode, press & U. To access another prompted worksheet, press the appropriate worksheet key or key sequence. Chapter 1: Overview of Calculator Operations 13

18 Setting the Format for Separators You can select either the U.S. or the European format for the display of separators in numbers. The default setting for separators is the U.S. format. U.S. and U.K. format (US): 1, European format (EUR): 1.000,00 Procedure: Changing the Separator Format 1. Press & # # #. The most recently selected separator format is displayed, either US or EUR. 2. Press & V repeatedly to select either US or EUR. 3. Choose one of the following to continue: To continue setting formats, press # or ". To return to the standard-calculator mode, press & U. To access another prompted worksheet, press the appropriate worksheet key or key sequence. Setting the Format for Calculation Method You can select either the chain calculation method or the AOS (algebraic operating system) calculation method. The default setting for calculation method is chain (Chn). When the calculation method is set to Chn (chain), the calculator solves problems in the order that you enter them. This calculation method is used in most financial calculators. For example, when you enter 3 H 2 < 4 N and the answer is 20. When the calculation method is set to AOS (the algebraic operating system), the calculator solves problems according to the standard rules of algebraic hierarchy. In AOS, multiplication and division operations are completed before addition and subtraction operations. This calculation method is used in most scientific calculators. For example, when you enter 3 H 2 < 4 N, the answer is 11. The multiplication operation is completed before the addition operation so that 2 Q 4 = 8 is calculated, and then the 3 is added to the result. 14 Chapter 1: Overview of Calculator Operations

19 Procedure: Changing the Calculation Method Format 1. Press & # # # #. The most recently selected calculation method is displayed, either Chn or AOS. 2. Press & V repeatedly to select either Chn or AOS. 3. Choose one of the following to continue: To continue setting formats, press # or ". To return to the standard-calculator mode, press & U. To access another prompted worksheet, press the appropriate worksheet key or key sequence. The Last Answer Feature To display the last answer, press & x. If your current equation calls for the last answer repeatedly, you can retrieve the value of ANS more than once. You can use the last answer feature to copy a value: From one place to another within the same worksheet. From one worksheet to another. From a worksheet to the standard-calculator mode. From the standard-calculator mode to a worksheet. ANS is updated when: You enter a value by pressing!. You compute a value by pressing %. You press N to complete a calculation. The calculator automatically computes a value. Example Procedure Keystrokes Display Clear the calculator. & U 0.00 Enter a calculation and complete it with the equal key. 3 H 1 N 4.00 Begin a new calculation. 2 ; 2.00 Recall the last answer. & x 4.00 Complete the calculation. N Chapter 1: Overview of Calculator Operations 15

20 Resetting the Calculator Resetting the calculator: Clears the display and any unfinished calculation. Clears all 10 memories. Clears all worksheet data and restores the default settings. (For information on specific worksheets, refer to the specific worksheet chapters.) Returns the calculator to the standard-calculator mode. Alternatives to Resetting Before resetting the calculator, consider the other methods for clearing described under Clearing the Calculator. For example, if you need to clear only one worksheet, you can do so without resetting. Procedure for Resetting If necessary, press P to clear any error condition before resetting the calculator. Then: 1. Press & }. RST? and the ENTER indicator are displayed. 2. You have a choice of two options. To reset the calculator, press!. RST and 0.00 are displayed. To cancel the reset operation, press & U is displayed. In either case, the calculator returns to operation in the standard-calculator mode. 16 Chapter 1: Overview of Calculator Operations

21 Using Worksheets: Tools for Financial Solutions What Is a Worksheet? Each worksheet is designed as a framework for a set of variables. The formulas that define the relationships between the variables, though not visible, are built into each worksheet. Each worksheet is designed to solve specific types of problems such as time-value-of money, cash-flow, bond, or depreciation problems. You access the Time-Value-of-Money (TVM) worksheet variables with the five TVM keys on the third row of the keyboard (,, -,., /, 0). All other worksheets are prompted. For example, the & \ key sequence lets you access the variables in the prompted worksheet to amortization calculations. You select settings for some variables, assign known values to other variables, and compute values for the unknown variables. Variable labels are displayed one at a time, along with any value previously assigned to the variable. By changing the values of the variables, you can quickly perform what if calculations. Generally, each worksheet is independent of the others; operations you perform in one worksheet do not affect variables in other worksheets. All current worksheet data is retained when you stop using a worksheet, even if you turn off the calculator. Types of Worksheets The calculator has two modes: the standard-calculator mode and the prompted-worksheet mode. In the standard-calculator mode, you can perform standard math operations and compute TVM values (N, I/V, PV, PMT, FV). Prompted worksheets guide you through specialized tasks such as amortization calculations and cash-flow analyses. Chapter 1: Overview of Calculator Operations 17

22 The TVM Worksheet You access the five time-value-of-money variables with the five TVM keys on the third row of the keyboard. You can access other parts of the TVM worksheet and other TVM functions by pressing the & key. Z [ \ ] ^, -. / 0 You can enter values using the five basic TVM keys at any time, even when you are in another worksheet. However, to compute TVM values or clear the TVM worksheet, you must be in the standard-calculator mode. To return to the standard-calculator mode, press & U. The Prompted Worksheets To access the column of variables within a prompted worksheet (or portion of a prompted worksheet), press the appropriate worksheet key or key sequence. For example, to access the amortization variables P1, P2, BAL, PRN, and INT (first payment in a range, last payment in a range, remaining balance, principal, and interest), press & \. This is the prompted worksheet for amortization calculations. Press # and " to move to the next or previous variable in a prompted worksheet. Different variable labels and values are displayed. Indicators in the display prompt you to select settings, enter values, or compute results. To return to standard-calculator mode, press & U. Types of Worksheet Variables There are five types of worksheet variables: enter-only, compute-only, automatic-compute, enter-or-compute, and settings. When you enter a value for a variable, the calculator displays. When you compute a value for a variable, the calculator displays. If you make a change to a worksheet that invalidates previously entered or computed values, the and indicators are removed. Refer to the chapters on each worksheet to find each variable s type. 18 Chapter 1: Overview of Calculator Operations

23 Enter-Only Variables For enter-only variables, you can only enter values; you cannot compute a value for this type of variable. Values for enter-only variables may be limited to a specified range. An enter-only variable can be: Entered directly from the keyboard. The result of a math calculation. Recalled from memory. Obtained from another worksheet using the last answer feature. When you access an enter-only variable, the variable label and the ENTER indicator are displayed. The ENTER indicator also reminds you that, once you have keyed a value into the display, you must press! to assign that value to the variable. An = sign is displayed between the label and the value when the value has been assigned to the variable. Compute-Only Variables For compute-only variables, you compute values by displaying the appropriate label and pressing %; you cannot enter a value for this type of variable. When you access a compute-only variable, the variable label and the COMPUTE indicator are displayed. This indicator reminds you to press % to compute a value for the displayed variable. An = sign is displayed between the label and the value when the value has been assigned to the variable. Automatic-Compute Variables For automatic-compute variables, you do not have to press %; a value is automatically computed and displayed when you access the variable by pressing # or ". After a value is automatically computed, an = sign is displayed between the label and the value. Enter-or-Compute Variables in the TVM Worksheet The five variables in the TVM worksheet (N, I/Y, PV, PMT, and FV) are enteror-compute variables. It is not necessary to be in the standard-calculator mode when you enter values for these variables. However, you must be in the standard-calculator mode to compute values for these variables. To enter a TVM value, key a value into the display and press the appropriate variable key. To compute a TVM value, press % and the appropriate variable key. Chapter 1: Overview of Calculator Operations 19

24 Enter-or-Compute Variables in the Prompted Worksheets Some prompted worksheets contain variables that you can either enter or compute. When you access an enter-or-compute variable, the variable label is displayed along with both the ENTER and COMPUTE indicators. The ENTER indicator reminds you that, if you key in a value for the variable, you must press! to assign the value to the variable. The COMPUTE indicator reminds you that, if you want to compute a value for the variable, you must press %. After you press! or %, an = sign is displayed between the label and the value. Selecting Worksheet Settings The TVM and most prompted worksheets have variables with two or more options. These are called settings. When you access a setting, the variable label and the SET indicator are displayed. The label that is displayed indicates the current setting. Press & V to display all the different options. 20 Chapter 1: Overview of Calculator Operations

25 CHAPTER 2 Using the Time-Value-of-Money and Amortization Worksheets The Time-Value-of-Money and Amortization worksheets are useful in applications where the cash flows are equal, evenly spaced, and either all inflows or all outflows. They help you solve problems involving annuities, loans, mortgages, leases, and savings. You can also generate an amortization schedule. The TVM and Amortization Keys Z [ \ ] ^, -. / 0 TVM and Amortization Worksheet Keys and Labels Key/Key Sequence Label Meaning Type of Variable, N Number of periods Enter/compute - I/Y Interest rate per year Enter/compute. PV Present value Enter/compute / PMT Payment Enter/compute 0 FV Future value Enter/compute & [ P/Y Number of payments per year Enter-only # C/Y Number of compounding periods per year Enter-only & ] END End-of-period payments Setting & V BGN Beginning-of-period payments Setting & \ P1 Starting payment Enter-only # P2 Ending payment Enter-only # BAL Balance Auto-compute # PRN Principal paid Auto-compute # INT Interest paid Auto-compute Chapter 2: Using the TVM and Amortization Worksheets 21

26 Notes about the TVM and Amortization Worksheets & ^ sets N, I/Y, PV, PMT, and FV to zero; does not affect P/Y, C/Y, or the BGN/END setting. & [ & z sets P/Y and C/Y to 12. & ] & z sets END (not BGN). & \ & z sets P1 and P2 to 1, and BAL, PRN, and INT to zero. & }! sets N, I/Y, PV, PMT, and FV to zero; P/Y and C/Y to 12; END (not BGN); P1 and P2 to 1; and BAL, PRN, and INT to zero. When solving a problem using only four of the five TVM variables, make sure the unused variable is zero. Enter values for PV, PMT, and FV as negative if they are outflows (cash paid out) or as positive if they are inflows (cash received). Use S to enter a negative value. Enter I/Y as the nominal interest rate. The TVM worksheet automatically converts I/Y to a per period rate based on the values for P/Y and C/Y. When you enter a value for P/Y, the same value is automatically entered for C/Y. (You can change C/Y.) The END/BGN setting lets you specify whether the transaction is an ordinary annuity or an annuity due. In ordinary annuities, the payments occur at the end of each payment period. Most loans are in this category. For ordinary annuities, select END. In annuities due, payments occur at the beginning of each payment period. Most leases are in this category. For annuities due, select BGN. Pressing % when P1 or P2 is displayed updates P1 and P2 to represent the next range of payments. A computed value for BAL after a specified number of payments may be slightly different than a computed value for FV after the same number of payments. When solving for BAL, PRN, and INT, the calculator uses the PMT value rounded to the number of decimal places specified by the decimal format. When solving for FV, the calculator uses the unrounded value for PMT. 22 Chapter 2: Using the TVM and Amortization Worksheets

27 Entering, Recalling, and Computing TVM Values You enter a TVM value by keying in a value and pressing the appropriate TVM key (,, -,., /, or 0). You recall a TVM value to the display by pressing J and the TVM key. When you enter or recall a value for any of the five TVM variables (N, I/Y, PV, PMT, or FV), you can be in either the standard-calculator mode or a prompted-worksheet mode. The display responds differently according to the mode you are in. In the standard-calculator mode (accessed by pressing & U), the variable label, the = sign, and the value you entered or recalled are displayed. In the prompted-worksheet mode, only the value you entered or recalled is displayed. Any label previously in the display remains. To compute a TVM value, press % and the appropriate TVM key. When you compute a TVM value, you must be in the standard-calculator mode. Press & U to return to the standard-calculator mode. Entering a Value for N using & Z You can use the & Z key sequence to enter a value for N. Pressing & Z automatically multiplies a displayed number by the value stored in the P/Y variable (number of payments per year. By entering the number of years (for example, 30) and pressing & Z, you can calculate the number of payments required to pay off an annuity. Then press, to enter that value as the number of payments in a TVM calculation. Entering Inflows and Outflows The calculator follows the established convention of treating inflows of cash (cash received) as positive and outflows of cash (cash paid out) as negative. You must enter inflows as positive values and outflows as negative values. The calculator displays computed inflows as positive values and computed outflows as negative values. loan amount 23,000 Enter inflows as positive Time Pmt Pmt Pmt 34 Pmt 35 Balloon Pmt - 15,000 Chapter 2: Using the TVM and Amortization Worksheets 23

28 Steps in a TVM Calculation The worksheet stores the values and settings you enter until you clear the worksheet or change the values or settings. Therefore, you may not need to do all the steps in the procedure every time you calculate a TVM problem. Procedure: Using the TVM Worksheet 1. Press & U & ^ to clear the worksheet. 2. Press & [ to enter payments per year and/or compounding periods per year. The P/Y label and current value are displayed. (The default value is 12.) If necessary, key in the number of payments per year and press!. 3. Press #. The C/Y label and current value and displayed. (The default value is 12.) When you entered a value for P/Y, the same value was automatically entered for C/Y. If necessary, key in a new value for the number of compounding periods per year and press!. 4. Press & ] to select beginning-of-period payments or end-of-period payments. (END is the default setting.) To select end-of-period payments, press & V repeatedly until END is displayed. To select beginning-of-period payments, press & V repeatedly until BGN is displayed. If you select beginning-of-period payments, the BGN indicator is displayed. If you select end-of-period payments, the BGN indicator is not displayed. 5. Press & U to return to the standard-calculator mode. 6. Enter values for at least three variables. For example, enter values for PV, I/Y, and N. To enter a value for a variable, key the value into the display and press the appropriate key. For example, to enter \$60,000 as the present value, key in a value of 60,000 and press.. PV = 60, is displayed. Note: Make sure the unused variable (in this case, FV) is zero. Pressing Q 0 stores zero to FV. 7. Compute a value for the unknown variable. To compute a value, press % and the appropriate key. Example: To compute and display a value for payment (PMT), press % /. PMT = and the computed value for the payment amount are displayed. 24 Chapter 2: Using the TVM and Amortization Worksheets

29 Steps in an Amortization Calculation The prompted worksheet for amortization calculations uses the values you entered and computed in the TVM worksheet to compute amortization data. The procedures on these pages give you two ways to generate an amortization schedule. Procedure: Generating an Amortization Schedule 1. Press & \. P1 is displayed, along with the previous value. 2. Specify the range of payments. To enter a value for P1 (the first payment in the range), key in a value and press!. To enter a value for P2 (the last payment in the range), press #. Then key in a value and press!. 3. Press # repeatedly to view the automatically computed values for BAL, PRN, and INT. The remaining balance (BAL) after payment P2, and the principal (PRN) and interest (INT) paid over the specified range are displayed. 4. Press & \ or, if INT is displayed, press # to display P1 again. Repeat steps 2 and 3 for each range of payments to generate an amortization schedule. Procedure: Automatically Generating an Amortization Schedule After you enter the initial values for P1 and P2, as described above, you can automatically compute an amortization schedule. 1. Press & \ or, if INT is displayed, press # to display P1 and the value you entered previously for P1. 2. Press %. This automatically updates both P1 and P2 to represent the next range of payments. The calculator computes the next range of payments using the same number of periods as in the previous range of payments. For example, if the previous range was 1 through 12 (12 payments), pressing % updates the range to 13 through 24 (12 payments). Chapter 2: Using the TVM and Amortization Worksheets 25

30 Procedure: Automatically Generating an Amortization Schedule (Continued) 3. Press # to display P2. If you pressed % when P1 was displayed, a new value for P2 is automatically displayed. (You can still enter a new value for P2, if necessary.) If you did not press % when P1 was displayed, you can press % when P2 is displayed to enter values for both P1 and P2 for the next range of payments. 4. Press # as needed to view the automatically computed values for BAL, PRN, and INT for the next range of payments. 5. Repeat steps 1 through 4 until the schedule is complete. Example: TVM/Amortization Application This two-part example shows you how to use the TVM and Amortization worksheets to compute the monthly payment on a 30-year loan and then generate an amortization schedule for the first three years of the loan. Example: Part 1 Using the TVM worksheet, determine the monthly payment on a 30-year mortgage with a loan amount of \$120,000 and an annual percentage rate of 9.125%. Procedure Keystrokes Display Clear TVM worksheet. If necessary, set payments per year to 12. If necessary, select endof-period payments. & U & ^ 0.00 & [ 12! P/Y = & ] & V END Return to standardcalculator mode. & U 0.00 Enter loan amount PV = 120, Enter interest rate I/Y = 9.13 Enter number of payments. 30 & Z, N = Compute payment. % / PMT = The computed monthly payment is \$ Because PMT is money paid out, it is displayed as a negative number. 26 Chapter 2: Using the TVM and Amortization Worksheets

31 Example: Part 2 Use the Amortization worksheet to generate an amortization schedule for the first three years of the loan. Assume that the first payment is in April; therefore, the first year has 9 payment periods. There are 12 payment periods per year thereafter. Procedure Keystrokes Display Select Amortization worksheet. & \ P1 (old contents) Clear worksheet. & z P1 = 1.00 Set ending period to 9. # 9! P2 = 9.00 View first year amortization data. Change beginning period to 10. Change ending period to 21 View second year amortization data. # # # BAL = PRN = INT = 119, , # 10! P1 = # 21! P2 = # # # BAL = PRN = INT = 118, , Move to P1 and press % to enter next range of payments # % P1 = View P2. # P2 = View third year amortization data. # # # BAL = PRN = INT = 117, , Note that the principal and interest are displayed as negative because they are outflows. Chapter 2: Using the TVM and Amortization Worksheets 27

32 28 Chapter 2: Using the TVM and Amortization Worksheets

33 CHAPTER 3 Using the Cash Flow Worksheet Three keys are available for performing cash-flow calculations. The ' key lets you enter cash flow data. The ( key lets you compute net present value, and the ) key lets you compute internal rate of return. Press # and " to move through each set of variables. Cash Flow Worksheet Keys and Labels Key Label Meaning Type of Variable ' Cfo Initial cash flow Enter-only # Cnn* Amount of nth cash flow Enter-only # Fnn* Frequency of nth cash flow Enter-only ( Z Discount rate Enter-only # NPV Net present value Compute-only ) IRR Internal rate of return Compute-only * nn represents the number of the cash flow (C01 C24) or the number of the corresponding frequency (F01 F24). Notes about the Cash Flow Worksheet & z sets all variable values to zero. & }! sets all variable values to zero. To enter cash-flow values and frequencies, press '. You can enter the initial cash flow (CFo) plus up to 24 cash flows, each of which can be a unique value. Enter inflows (cash received) as positive and outflows (cash paid out) as negative. Use S to enter a negative value. The INS and DEL indicators in the display let you know that the & X and & W key sequences are available. these key sequences let you insert or delete cash flows. Chapter 3: Using the Cash Flow Worksheet 29

34 Interpreting the Results of IRR Calculations When you compute a value for IRR, the calculator displays either a solution or an error message. When a solution is displayed, there are two possibilities. The displayed solution is the only solution. There may be additional solutions. This occurs when there are two or more sign changes in the cash flow sequence. When an error message is displayed, there are two possibilities. No solution for IRR exists (Error 5). This occurs when there are no sign changes in the cash flow sequence. The calculator is unable to determine a value for IRR within a maximum number of iterations (Error 7). For a detailed description of sign changes as they relate to IRR, refer to the Appendix. Uneven and Grouped Cash Flows Uneven Cash Flows The Cash Flow worksheet lets you analyze the value of money over equal time periods. It allows you to enter uneven values, each of which can be either an inflow (cash received) or an outflow (cash paid out). Similar to an annuity's present value (PV) in the TVM worksheet, a typical cash-flow problem usually has an initial cash flow (labeled CFo). This is always a known, entered value. 30 Chapter 3: Using the Cash Flow Worksheet

35 Grouped Cash Flows In some cash-flow problems, every cash flow may be a unique value. In other cash-flow problems, there may be consecutive cash flows of equal value. You must enter unequal cash flows separately, but you can save time and space by using the Fnn variable to enter groups of consecutive cash flows of equal value. Entering Cash Flows You can enter the initial cash flow and up to 24 additional cash flows, each of which can be a unique value. Enter inflows as positive and outflows as negative. If you have consecutive cash flows of equal value, you can enter the cash-flow value and then a frequency of up to 9,999 for the number of times the value occurs. Procedure: Entering Cash Flows 1. Press ' to select the cash flow entry portion of the Cash Flow worksheet. CFo is displayed, along with any previous value. 2. If necessary, press & z to clear the worksheet. 3. Key in a value for CFo (initial cash flow) and press!. 4. Press # to display C01. Key in a value for the first cash flow or group of cash flows and press!. Remember to enter an inflow (cash received) as a positive number and an outflow (cash paid out) as a negative number. 5. Press # to display F01. If there are multiple, consecutive, equal occurrences of the cash flow you entered, key in the number of occurrences (frequency) and press!. The default value is Press # to display the next available cash flow. Key in the value of the cash flow(s) and press!. 7. Press #. If there are multiple, consecutive, equal occurrences of the cash flow you entered, key in a value for the frequency and press!. 8. Repeat steps 6 and 7 until all cash flows and frequencies are entered. When you have entered all of your cash-flow data, you can press # or " to review all of your entries. Chapter 3: Using the Cash Flow Worksheet 31

36 Deleting Cash Flows When you delete a cash flow, the calculator decreases the numbers of subsequent cash flows. Before deleting 8,000 cash flow After deleting 8,000 cash flow Procedure: Deleting a Cash Flow The DEL indicator lets you know when you can delete a cash flow. 1. Press # or " until the cash flow you want to delete is displayed. 2. Press & W. The cash flow you specified (and its frequency) is deleted. The calculator decreases the numbers of subsequent cash flows so that there is no gap. Inserting Cash Flows When you insert a cash flow, the calculator increases the numbers of the current and subsequent cash flows. When inserting cash flows, remember that the most cash flows you can enter is Chapter 3: Using the Cash Flow Worksheet

37 Procedure: Inserting a Cash Flow The INS indicator lets you know when you can insert a cash flow. 1. Press # or " until the display shows the current cash flow where you want to insert the new cash flow. For example, if you want to insert a new second cash flow, display C Press & X. 3. Key in the value of the new cash flow and press!. The new cash flow is entered before the current cash flow. The calculator increases the numbers of the current and subsequent cash flows. For example, C02 becomes C If necessary, press #. Then key in a value for the frequency and press!. Computing NPV and IRR IRR is the interest rate at which the net present value of the cash flows is equal to zero. NPV is the sum of the present values for the cash inflows (cash received) and outflows (cash paid out). A positive value for NPV indicates a profitable investment. Procedure: Computing Net Present Value 1. Press (. Z is displayed, along with the previous value. 2. Key in a value for Z (discount rate) and press!. 3. Press # to display the NPV variable label. 4. Press % to compute the net present value of the series of cash flows. The calculator computes and displays the value. Procedure: Computing Internal Rate of Return 1. Press ). IRR is displayed, along with the previous value. 2. Press % to compute the internal rate of return. The calculator computes and displays the value. Chapter 3: Using the Cash Flow Worksheet 33

38 Example: Cash Flow Application A company plans to pay \$7,000 for a new machine. The company would like a 20% annual return on its investment. Over the next six years, the company expects to receive the annual cash flows shown below. Year Cash Flow Number Cash Flow Estimate 1 1 3, ,000 each year 6 3 4,000 The following time line shows that these cash flows are a combination of equal and unequal values. Because the initial cash flow (CFo) is an outflow, it is a negative value. On the next few pages, you will enter cash flow data, edit the data when a change is necessary, and compute the net present value and internal rate of return. Example: Entering the Data Enter the data from the table above. Procedure Keystrokes Display Select Cash Flow worksheet. ' CFo (old contents) Clear worksheet. & z CFo = 0.00 Enter initial cash flow. Enter cash flow for first year. Enter cash flows for years two through five. Enter cash flow for sixth year S! CFo = -7, # 3000! # # 5000! # 4! # 4000! # C01 = F01 = C02 = F02 = C03 = F03 = 3, , , Chapter 3: Using the Cash Flow Worksheet

39 Example: Editing the Data After entering the data, you learn that the cash flow projections you were given were incorrect. The \$4,000 cash-flow value should occur in the second year instead of the sixth. Otherwise, the entries are correct. Year Cash Flow Estimate (Original) 1 3,000 3, ,000 4, ,000 5, ,000 5, ,000 5, ,000 5,000 Cash Flow Estimate (Corrected) Edit the existing data in the Cash Flow worksheet by deleting the \$4,000 value for year 6 and inserting it for year 2. Procedure Keystrokes Display Move to third cash flow. " C03 = 4, Delete third cash flow. & W C Move to second cash flow. "" C02 = 5, Insert new second cash flow. Move to next cash flow to verify data. & X 4000! # # # C02 = F02 = C03 = F03 = 4, , Chapter 3: Using the Cash Flow Worksheet 35

40 Example: Computing the Net Present Value Compute the net present value (NPV) using an interest rate per period ([) of 20%. Procedure Keystrokes Display Access NPV portion of Cash Flow worksheet. ( [ = 0.00 Enter interest rate per period. 20! [ = Compute net present value. # % NPV = 7, Example: Computing the Internal Rate of Return Compute the internal rate of return (IRR). Procedure Keystrokes Display Access IRR portion of Cash Flow worksheet. ) IRR = 0.00 Compute internal rate of return. % IRR = The internal rate of return is 52.71%. 36 Chapter 3: Using the Cash Flow Worksheet

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