User manual TEXAS INSTRUMENTS BAIIPLUS

[. . . ] BA II PLUSTM Calculator Important Information Texas Instruments makes no warranty, either express or implied, including but not limited to any implied warranties of merchantability and fitness for a particular purpose, regarding any programs or book materials and makes such materials available solely on an "as-is" basis. In no event shall Texas Instruments be liable to anyone for special, collateral, incidental, or consequential damages in connection with or arising out of the purchase or use of these materials, and the sole and exclusive liability of Texas Instruments, regardless of the form of action, shall not exceed the purchase price of this product. Moreover, Texas Instruments shall not be liable for any claim of any kind whatsoever against the use of these materials by any other party. USA FCC Information Concerning Radio Frequency Interference This equipment has been tested and found to comply with the limits for a Class B digital device, pursuant to Part 15 of the FCC rules. These limits are designed to provide reasonable protection against harmful interference in a residential installation. [. . . ] To compute the internal rate of return, press %. The calculator displays the IRR value. When solving for IRR, the calculator performs a series of complex, iterative calculations that can take seconds or even minutes to complete. The number of possible IRR solutions depends on the number of sign changes in your cash-flow sequence. · When a sequence of cash flows has no sign changes, no IRR solution exists. The calculator displays Error 5. · When a sequence of cash flows has only one sign change, only one IRR solution exists, which the calculator displays. · When a sequence of cash flows has two or more sign changes: ­ ­ At least one solution exists. As many solutions can exist as there are sign changes. Cash Flow Worksheet 45 When more than one solution exists, the calculator displays the one closest to zero. Because the displayed solution has no financial meaning, you should use caution in making investment decisions based on an IRR computed for a cash-flow stream with more than one sign change. 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 IRR, 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) Internal rate of return (IRR) 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: Year Purchase 1 2­5 6 Cash Flow Number CFo C01 C02 C03 Cash Flow Estimate -$7, 000 3, 000 5, 000 each year 4, 000 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. 46 Cash Flow Worksheet Entering Cash-Flow Data To Select Cash Flow worksheet. Enter cash flows for years two through five. CFo= CFo= C01= F01= C02= F02= C03= F03= Display 0. 00 -7, 000. 00 3, 000. 00 1. 00 5, 000. 00 4. 00 4, 000. 00 1. 00 # 3000 !# Editing Cash-Flow Data After entering the cash-flow data, you learn that the $4, 000 cash-flow value should occur in the second year instead of the sixth. To edit, delete the $4, 000 value for year 6 and insert it for year 2. Press " &W "" & X 4000 !# # # Display C03= C03= C02= C02= F02= C03= F03= 4, 000. 00 0. 00 5, 000. 00 4, 000. 00 1. 00 5, 000. 00 4. 00 Cash Flow Worksheet 47 Computing NPV Use an interest rate per period (I) of 20%. To Access interest rate variable Press ( Display I= I= NPV= 0. 00 20. 00 7, 266. 44 Enter interest rate per period. Compute internal rate of return. Answer: IRR is 52. 71%. Press ) #% Display IRR= IRR= 0. 00 52. 71 Example: Value of a Lease with Uneven Payments A lease with an uneven payment schedule usually accommodates seasonal or other anticipated fluctuations in the lessee's cash position. A 36-month lease has the following payment schedule and beginning-ofperiod payments. Number of Months 4 8 3 9 2 10 Payment Amount $0 $5000 $0 $6000 $0 $7000 If the required earnings rate is 10% per 12-month period with monthly compounding: · What is the present value of these lease payments? 48 Cash Flow Worksheet · What even payment amount at the beginning of each month would result in the same present value? Because the cash flows are uneven, use the Cash Flow worksheet to determine the net present value of the lease. Computing NPV The cash flows for the first four months are stated as a group of four $0 cash flows. Because the lease specifies beginning-of-period payments, you must treat the first cash flow in this group as the initial investment (CFo) and enter the remaining three cash flows on the cash flow screens (C01 and F01). Note: The BGN/END setting in the TVM worksheet does not affect the Cash Flow worksheet. To Set all variables to defaults. [. . . ] TEXAS INSTRUMENTS SHALL NOT BE LIABLE FOR LOSS OF USE OF THE PRODUCT OR OTHER INCIDENTAL OR CONSEQUENTIAL COSTS, EXPENSES, OR DAMAGES INCURRED BY THE CONSUMER OR ANY OTHER USER. Some states/provinces do not allow the exclusion or limitation of implied warranties or consequential damages, so the above limitations or exclusions may not apply to you. This warranty gives you specific legal rights, and you may also have other rights that vary from state to state or province to province. During the above one (1) year warranty period, your defective product will be either repaired or replaced with a reconditioned model of an equivalent quality (at TI's option) when the product is returned, postage prepaid, to Texas Instruments Service Facility. The warranty of the repaired or replacement unit will continue for the warranty of the original unit or six (6) months, whichever is longer. [. . . ]