Sharp EL-738F Operation Manual page 44

Procedure
Enter cash fl ow data.
Return to the initial dis-
play in NORMAL mode.
If there is cash fl ow data stored, press > . b to
1
*
clear it.
2. Calculate IRR.
Procedure
Select discounted cash
fl ow analysis, and set all
the variables to default
values.
Calculate IRR (RATE
(I/Y)).
Answer: The net present value of the cash fl ows equals zero at
an IRR of 23.14%.
2
Your company has prepared forecasts for the development costs
and operating profi ts of the next generation of your product.
Development costs for each of the next three years (Years 1 to
3) will be $50,000. Manufacturing equipment costing $100,000
will be purchased at the end of Year 3. Annual profi ts for the
fi ve-year product life (from Year 4 to Year 8) are projected to be
$80,000. The salvage value of the manufacturing equipment at
the end of Year 8 is $20,000. Given a 12% discount rate, should
your company proceed with the product development?
, 12000 J
3000 J
5000 > 3 J
4000 J
s
. < . b
@
Calculating the present value of variable cash
fl ows
Key operation
Key operation
42
Display
DATA SET:CF
000
DATA SET:CF
100
DATA SET:CF
200
DATA SET:CF
300
000
Display
RATE(I/Y)=
000
RATE(I/Y)=
2314