Enter the cash flows
This uses the same project as our NPV guide: $250,000 paid today and then $80,000, $95,000, $110,000, and $60,000 over the next four years, with a 9% required return.
Clear, then enter the cash flows
- Press CF to open the cash flow worksheet. Then press 2ND and CLR WORK to clear it.
- CF0: type 250000, press +/-, press ENTER, then press the down arrow.
- C01: type 80000, press ENTER, then the down arrow. F01 is 1, so press the down arrow again.
- C02: type 95000, press ENTER, then the down arrow twice.
- C03: type 110000, press ENTER, then the down arrow twice.
- C04: type 60000, press ENTER.
Get NPV and IRR
NPV at 9%
- Press NPV. The screen shows I = and a number.
- Type 9 and press ENTER, then press the down arrow so it shows NPV = .
- Press CPT. The answer is 30,799.79.
IRR
- Press IRR, then press CPT. The answer is 14.60 (percent).
The NPV is positive and the IRR of 14.60% is above the 9% requirement, so both rules say accept.
Bond prices with the TVM keys
The BA II Plus assumes 12 payments per year until you change it. When you use the per-period rate, set payments per year to 1 first. Then price the semiannual bond from our bond guide: 20 periods, a 4% rate per period, a $30 coupon, and $1,000 face value.
Set up and solve
- Press 2ND, then P/Y. Type 1 and press ENTER. Press 2ND, then QUIT to leave.
- Press 2ND, then CLR TVM (above the FV key) to clear old values.
- Enter N = 20, I/Y = 4, PMT = 30, FV = 1000, each followed by its key.
- Press CPT, then PV. The answer is -864.10.
The negative sign only means you would pay that amount to buy the bond. The price is $864.10.
Memory and setup traps
- Not clearing the worksheet. The calculator keeps the last problem's cash flows until you clear them with 2ND and CLR WORK.
- Forgetting the frequency. If a cash flow repeats, F01, F02, and so on tell the calculator how many times.
- Leaving the first cash flow positive. CF0 is the amount you pay, so it needs a negative sign.
- Leaving payments per year at 12 when you enter a per-period rate in the TVM keys.
- Entering the discount rate as a decimal. Type 9 for 9%, not 0.09.