Cash flow calculations, How to use the cash flow application – HP 10B User Manual
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6
Cash Flow Calculations
How to Use the Cash Flow Application
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The cash flow application is used to solve problems where
cash flows occur over regular intervals but arc of varying
amounts. You can also use cash How calculations to solve
problems with rcgtilar, equal, periodic cash flows, but these
situations are handled more easily using TVM.
In general, these arc the steps for cash flow calculations on the HP-IOB.
1. Organize your cash flows on paper —a cash flow diagram is useful.
2. Clear the registers.
3. Enter the number of periods per year.
4.
Enter the amount of the initial investment.
5. Enter the amount of the next cash flow.
6
. If the amount entered in step 5 occurs more than once
consecutively,
enter the number of times it occurs.
7. Repeat steps 5 and
6
for each cash flow and group.
8
. To calculate net present value, enter the annual interest rate and
press il/YRI: then press BINPVI, Or, to calculate annual internal rale
of return, press BlIRR/YRi.
Example: A Short Term Investment.
The following cash flow
diagram represents an investment in stock over three months. Purchases
were made at the beginning of each month, and the stock was sold at the
end of the third month. Calculate the annual internal rate of return and
the monthly rate of return.
6: Cash Flow Calculations 75