Example: Calculating IRR and NPV of an Investment. An investor makes an initial investment of $80,000, and expects returns over the next five years as illustrated below.

115,000

 

5,000

 

 

5,500

 

 

 

4,500

 

 

 

 

 

 

 

 

 

4,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

2

 

3

 

4

 

5

 

 

 

 

 

 

 

 

 

$ _ 80,000 (Initial flow)

Calculate the total of the cash flows and the internal rate of return of the investment. In addition, calculate the net present value and net future value, assuming an annual interest rate of 10.5%.

Start the problem with an empty cash-flow list. Since the cash flows are ungrouped, each one occurs just once. Turn off the #TIMES prompt to make cash-flow entry faster.

Keys:

Display:

Description:

 

 

 

Displays current cash-flow list

 

 

 

 

 

and CFLO menu keys.

 

 

 

@c

Clears current list or gets a

 

 

 

new one. The empty list

 

 

or

prompts for its initial cash

 

 

flow.

 



  Briefly shows the status of



, then returns to the

 

list. With prompting off, all

 

cash flows are assumed to

 

occur just once.

102 7: Cash Flow Calculations

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HP 17bII manual Keys Display Description, 102 7 Cash Flow Calculations