Appendix B: More About Calculations

IRR/YR Calculations

The calculator determines IRR/YR for a set of cash flows using mathematical formulas that search for the answer. The process finds a solution by estimating an answer and then using that estimate to do another calculation. This is called an iterative process.

In most cases, the calculator finds the desired answer, since there is usually only one solution to the calculation. However, calculating IRR/YR for certain sets of cash flows is more complex. There may be more than one (or no) mathematical solution to the problem.

Possible Outcomes of Calculating IRR/YR

These are the possible outcomes of an IRR/YR calculation:

•Case 1. The calculator displays a positive answer. This is the only positive answer. However, one or more negative answers may exist.

•Case 2. The calculator displays a negative answer and no message.This is the only answer.

•Case 3. The calculator displays: No Solution. There is no answer. This situation might be the result of an error, such as a mistake in keying in the cash flows. A common mistake that results in this message is putting the wrong sign on a cash flow. A valid cash-flow series for an IRR/YR calculation must have at least one positive and one negative cash flow.

Range of Numbers

The largest positive and negative numbers available on the calculator are ± 9.99999999999

×10499; the smallest positive and negative numbers available are ±1 × 10–499. Underflow briefly displays UFLO and then displays zero. Refer to the messages OFLO and UFLO in Appendix C.

Equations

Business Percentages and Break-even Calculations

⎛ PRC – COST⎞

⋅ 100

⎛ PRC – COST⎞

⋅ 100

MAR = ⎝

---------------------------------PRC-

⎠

MU = ⎝ ---------------------------------COST-⎠

⎛ NEW – OLD⎞

⋅ 100

PROFIT = (SP-VC) x UNITS - FC

%CHG = ⎝

-------------------------------OLD

⎠

Probability

P

C

=

n!

(-----------------n– r)!

=

n!

(----------------------n– r)!r!

Appendix B: More About Calculations

I

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Image 167
HP 10bII+ Financial manual Appendix B More About Calculations, IRR/YR Calculations, Equations
Page 166 Page 168

10bII+ Financial specifications

The HP 10bII+ Financial Calculator is a versatile and powerful tool designed to meet the needs of finance students, professionals, and anyone involved in financial planning and analysis. Known for its compactness and user-friendly interface, this calculator incorporates a range of features specifically tailored for financial calculations, making it an essential gadget for banking, real estate, and investment analysis.

At the heart of the HP 10bII+ is its ability to perform a wide variety of financial functions, including time value of money calculations, cash flow analysis, bond pricing, and depreciation. Its built-in functions facilitate the computation of interest rates, present and future values, net present value (NPV), internal rate of return (IRR), and annuities. This array of functionalities allows users to tackle complex financial problems with ease.

One of the standout technologies in the HP 10bII+ is its RPN (Reverse Polish Notation) input system, which allows for efficient data entry and calculation. Users can perform consecutive calculations without the need for parentheses, streamlining the process significantly. Alternatively, the calculator can also function with a standard algebraic input, catering to different user preferences.

The design of the HP 10bII+ is sleek and compact, making it highly portable and easy to handle. With a large, easy-to-read display, it ensures that users can view their calculations clearly, even in low-light environments. The keys are well-spaced and tactile, allowing for a comfortable typing experience during intensive calculations.

The calculator also offers a range of memory functions, enabling users to store and recall important values easily. This is particularly useful for financial professionals who must deal with multiple calculations and refer back to previous results frequently.

Additionally, the HP 10bII+ is powered by two AAA batteries, providing a long battery life that ensures reliability during extended use. It also features an automatic shut-off function, which conserves battery life when the calculator is not in use.

In summary, the HP 10bII+ Financial Calculator is a high-performance device that combines essential financial functions with user-friendly design and robust technology. Whether for educational purposes or professional finance work, its capabilities make it an invaluable asset for anyone dealing with financial calculations and decision-making.
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