Cash Flow (Investment Appraisal); Npv; Nfv; Irr - Casio FX-CG20 AU User Manual

4. Cash Flow (Investment Appraisal)

This calculator uses the discounted cash flow (DCF) method to perform investment appraisal
by totalling cash flow for a fixed period. This calculator can perform the following four types of
investment appraisal.
• Net present value (
• Net future value (
• Internal rate of return (
• Payback period (
A cash flow diagram like the one shown below helps to visualize the movement of funds.
With this graph, the initial investment amount is represented by
later is shown by
Investment appraisal can be used to clearly determine whether an investment is realizing
profits that were originally targeted.
u NPV
NPV = CF NPV = CF
n
: natural number up to 254
u NFV
NFV = NPV × (1 + i ) NFV = NPV × (1 + i )
u IRR
0 = CF 0 = CF

NPV

In this formula,
however, that minute fractional values tend to accumulate during the subsequent calculations
performed automatically by the calculator, so
becomes more accurate the closer that
NPV
)

NFV

)

IRR

)
PBP
)
CF CF
2 2
CF CF
1 1
CF CF
0 0
CF
, two years later by
1
CF CF
1 1
+ + + +
0 0
(1+ i) (1+ i)
n n
CF CF CF CF
1 1
+ + + +
0 0
(1+ i) (1+ i) (1+ i) (1+ i)
= 0, and the value of
CF CF
5 5
CF CF
CF CF
3 3
CF CF
4 4
CF
, and so on.
2
CF CF CF CF
2 2 3 3
+ + + ... + + ... +
2 2 3 3
(1+ i) (1+ i) (1+ i) (1+ i)
CF CF
2 2 3 3
+ + + ... + + ... +
2 2 3 3
(1+ i) (1+ i)
IRR
is equivalent to
NPV
never actually reaches exactly zero.
NPV
approaches to zero.
7-7
CF CF
7 7
6 6
CF
. The cash flow one year
0
CF CF
n n
n n
(1+ i) (1+ i)
CF CF
n n
n n
(1+ i) (1+ i)
i
× 100. It should be noted,
I % I %
i = i =
100 100
IRR