Calculating Net Present Value (Npv) - HP 0012C-90001 User Manual

58 58 Section 4: Additional Financial Functions Section 4: Additional Financial Functions
58 58 Section 4: Section 4: Additional Financial Functions Additional Financial Functions
NPV
If is zero, the financial value of the investor's assets would not change:

the investor is indifferent toward the investment.
NPV
If is negative, the financial value of the investor's assets would be

decreased: the investment is not financially attractive.
NPV
A comparison of the
them is most desirable: the greater the
financial value of the investor's assets.
IRR
is the rate of return at which the discounted future cash flows equal the initial
cash outlay: IRR is the discount rate at which
to the present value discount rate also indicates the result of the investment:
IRR
If is greater than the desired rate of return, the investment is financially

attractive.
IRR
If is equal to the desired rate of return, the investor is indifferent toward

the investment.
IRR
If is less than the desired rate of return, the investment is not financially

attractive.

Calculating Net Present Value (NPV)

Calculating Net Present Value (NPV)
Calculating Net Present Value (NPV) Calculating Net Present Value (NPV)
Calculating NPV for Ungrouped Cash Flows. If there are no equal consecutive Calculating NPV for Ungrouped Cash Flows. Calculating NPV for Ungrouped Cash Flows. Calculating NPV for Ungrouped Cash Flows.
cash flows, use the procedure described (and then summarized) below. With this
NPV
procedure, (and
CF
the initial investment
equal — for example, if the cash flows in periods three and four are both
$8,500 — you can solve problems involving more than 20 cash flows, or you can
minimize the number of storage registers required for problems involving less than
20 cash flows, by using the procedure described next (under Calculating
Grouped Cash Flows, page 61).
The amount of the initial investment (
J key. Pressing gJ stores CF
number 0 in the n register.
's of alternative investment possibilities indicates which of
NPV
IRR
) problems involving up to 20 cash flows (in addition to
) can be solved. If two or more consecutive cash flows are
0
CF
) is entered into the calculator using the
0
in storage register R
0
, the greater the increase in the
NPV is zero. The value of
and also stores the
0
IRR relative
NPV
for