INTERNAL RATE OF RETURN
(IRR)
1.
Modes:
4
key,
Inputting Data
3.1. Before inputting data, you need to clear the
memories. To do this, press the SHIFT
AC
and
keys.
CFj
Nj keys are used
3.2. The
and
to input corresponding data.
3.2. If successive cash flows contain the same
amounts: the Nj key can be used in
place of the CFj
key. In these cases
Nj
the
number must be a natural
number, and it must be input immediately
CFj
after the
Example:
3200
4.
$2.8m
$2.8m
$2.8m
$2.8m
$2.8m
$2.8m
CF2
CF3
CF4
CF5
CF6
CF7
CF8
CF0
-$17million
OPERATION
MODE
After pressing the MODE key and
perform operations in the CF mode.
3.
$2.8m
CF1
Formula:
CF1
CF2
CF3
CFi
O = CF0 + ___ + ____ + ____ + ……+ __
(1+i) (1+i) (1+i)
(1+i)j
2.
$2.8m
CFj
4
Nj
IRR Calculation
4
MODE
17
+
2.8
CFi
5
2
/-
DISPLAY
SHIFT
AC
CFj
8
Nj
0
-17.00
8.00
IRR
6.57(%)
NPV
0.00
If you need any further assistance with the
use of a financial calculator, please make
an appointment with one of the Finance
Academic Mentors in the Student
Learning Centre.
HOW TO USE A
FINANCIAL
CALCULATOR
THIS BROCHURE WILL
EXPLAIN SOME OF THE
BASIC CALCULATIONS
WHICH CAN BE
COMPUTEDED ON THE
CASIO FC-100 FINANCIAL
CALCULATOR.
Ricky Liu: Academic Mentor
Student Learning Centre
Massey University, Auckland
2004
Results can be output by pressing the IRR key.
(It may take a while for the data to be output).
Example:
Company XYZ is planning to construct a new plant.
The data listed below has been gathered regarding the
project. What is the annual IRR for this investment
plan (to the nearest two decimal places)?
HELPING YOU GET THE MOST
OUT OF YOUR TIME AT
UNIVERSITY
FINANCIAL FUNCTION KEYS
These are used to:
• Calculate the number of payments in a loan or
ordinary annuity
• Determine interest rates on loans and rates of
return on investments
• Solve for the amount of payments on loans or
investment plans, and
• Determine present and future values of cash
payments or ordinary annuities.
FUNCTION
KEY
NUMBER OF PERIODS
I
PERIODIC INTEREST RATE
PV
PERIODIC PAYMENTS
FV
COMP
PMT
COMP
PV
Principal
COMP
FV
Total of Principal
& Interest
COMP
i%
Interest Rate
Payment Amount
CFj 4
Nj
Example: 3200
($3200 of revenue for 4 successive years)
4.
NPV Calculation
Results can be output by pressing the
Key.
PV = -800 (principal)
FV = 1,000 (total of principal and interest)
N = 10 (term)
PMT = 50
i% = 8%
PRESENT VALUE
PMT
N
Example: i% = ?
USE
N
3.4. If successive cash flows contain the same
amounts, the Nj number must be a
natural number, and it must be input
Immediately after the CFj
Terms
COMP
Example: You are thinking of purchasing a
condominium. According to your plan, you can
rent the condo to students for 10 years, after
which you will sell it, hoping to see a yield of
8% per annum. If the purchase price is
$170,000, you charge $1,000 in rent per month
($12,000 per annum), and assuming you can sell
the condo in 10 years for $220,000, will you be
able to reach your profit target?
NET PRESENT VALUE (NPV)
FUTURE VALUE
1. Formula:
Each of the five financial function keys controls one
of the five financial registers of the calculator, and
serves two purposes:
1.
2.
To enter the value of a financial parameter
into the calculator
To command the calculator to solve for an
unknown parameter.
Examples
2. Modes:
After pressing the MODE key, find the key
for “cash flow” mode. On the Casio FC-100
calculator, Press
4
the key.
3. Inputting Data
1. DATA INPUT
Pressing
CF1
CF2
CF3
… CFi
NPV = CFo +
+
+
+
+
(1+i) (1+i)2 (1+i)3
(1+i)i
N
i%
PMT
PV
or
FV
Inputs the currently displayed value. Input can be
performed in any sequence desired.
only
N
For annual term, multiplies by 1/12 or 12 before input.
2. CALCULATION RESULT INPUT
the following keys produce the corresponding results
on the display when pressed after the COMP Key:
3.1. Before inputting data, it is necessary to press
SHIFT
the
and AC keys to clear
CFj
and Nj memories.
i%
the
$12,000
$12,000
$12,000
$12,000
$12,000
$12,000
$12,000
$12,00
$12,000
$12,000
CF1
CF2
CF3
CF4
CF5
CF6
CF7
CF8
CF9
1
2
3
4
5
6
7
8
9
CF0
-$170,000
OPERATION
MODE
170,000
4
3.3. Each time the CFj
Key is pressed,
the CF number is incremental from CFo to
CF14 (up to 15 sets of CFi inputs can be
made).
10
Ac
CFj
220,000
9
Nj
9
=
CFj
232000
i%
NPV
0
-170000
CFj
/-
+
DISPLAY
SHIFT
+
12,000
12,000
CF10
$220,00 + $12,000
8
i% , CFj and Nj keys
3.2. The
are used to input corresponding data.
NPV
8
12423.54417