Discounted Cash Flow Analysis - HP -15C Advanced Functions Handbook

Section 1: Using [SOLVE"! Effectively 39
If the payments were increased to $1,500, what would the yield be?
Keystrokes Display
1500Q5] 1,500.00 Enters PMT= 1500.
(ITIlR/Sl 1.18 Calculates i (monthly).
120 14.12 Calculates annual yield.
(Til USER | 14.12 Deactivates User mode.
Discounted Cash Flow Analysis
This program performs two kinds of discounted cash flow analysis:
net present value (NPV) and internal rate of return (IRR). It
calculates NPV or IRR for up to 24 groups of cash flows.
The cash flows are stored in the two-column matrix C. Matrix C
has one row for each group of cash flows. In each row of C, the first
element is the cash flow amount; the second element is the number
of consecutive cash flows having that amount (the number of flows
in that group.) The first element of C must be the amount of the
initial investment. The cash flows must occur at equal intervals; if
no cash flow occurs for several time periods, enter 0 for the cash
flow amount and the number of zero cash flows in that group.
After all the cash flows have been stored in matrix C, you can enter
an assumed interest rate and calculate the net present value (NPV)
of the investment. Alternatively, you can calculate the internal
rate of return (IRR). The IRR is the interest rate that makes the
present value of a series of cash flows equal to the initial
investment. It's the interest rate that makes the NPV equal zero.
IRR is also called the yield or discounted rate of return.
The fundamental equation for NPV is
i/WO)~
n
j
+ iVlOO)
;
for i> -100
z'/lOO
/
for i = 0
; = i
where / .n/is defined as -1.
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