Texas Instruments Calculator - Manual (Page 51)

Cash Flow Worksheet 47
The time line reflects a sequence of cash flows with three sign
changes, indicating that one, two, or three
IRR solutions can exist.
• When solving complex cash-flow problems, the calculator might not
find
PB , DPB , IRR , and MOD , even if a solution exists. In this case, the
calculator displays Error 7 (iteration limit exceeded).
Example: Solving for Unequal Cash Flows
These examples show you how to enter and edit unequal cash-flow data
to calculate:
• Net present value ( NPV )
• Net future value ( NFV )
• Payback ( PB )
• Discounted payback ( DPB )
• Internal rate of return ( IRR )
• Modified internal rate of return ( MOD )
A company pays $7,000 for a new machine, plans a 20% annual return on
the investment, and expects these annual cash flows over the next six
years:
As the time line shows, the cash flows are a combination of equal and
unequal values. As an outflow, the initial cash flow (
CFo ) appears as a
negative value.
Year Cash Flow Number Cash Flow Estimate
Purchase CFo -$7,000
1 C01 3,000
2–5 C02 5,000 each year
6 C03 4,000