HP 95LX Manual page 52

In this display, you'll see these values:
NPY is the Net Present Value—the value of all cash-flows in the invest-
ment discounted at the user-specified periodicinterest rate (1 4=18).
NUS is the Net Uniform Series—the size ofuniform cash-flows that would
be equivalent to the NPV of the current list of uneven cash-flows.
NFY is the Net Future Value—the future value of the NPV at the end of
the current cash-flow scenario—assuming thatit is invested at the
user-specified periodic interest rate (I1%=18).
TOTAL is the raw sum of all of the cash-flows (with no discounting).
IRR Calculates the Internal Rate ofReturn—the periodic interest rate at
which the NPV of the cash-flows equals zero.
I% is the periodic interest (discount) rate that the you specify that the
NPV calculation use. Because you haven't yet specified any rate, the
default rate of 10% is used.
Modify the periodic interest rate (1%) to better reflect reality. The periods used
in this scenario are months and a monthly discount rate of 10% is notrealistic.
This is why all the analytic measures (NPV, NUS, NFV) are negative. Divide
10% by 12 to get a proper monthly rate: 0.833%. Now enter 0.833 as 1%, by
pressing (-J8]3]3)([ENTER).
Much better: At a discount rate of 10% per year, This cash-flow scenario has,
a positive NPV and is equivalent to receiving $63.98 at the end of each of the
next eight months—with noinitialinvestment at all. The IRR is 1.1294246629%
per month or 13.55% per year. Thisis the breakeven point: as long asthe actual
discount rate (I%) is less than the IRR, the investment's IRR will be positive.
Plotting the Cash-Flow Scenario
If you want to see a visual display of the current cash-flow scenario in —CFLOMW,
you have three choices:
Display a bar graph of the cash-flows: press .
Display a plot ofthe NPV versus 1%: press (ALT} H { P ) . The macro asks you to enter
a starting value for 1% and the increment between each point on the plot.
Use the Graph feature of Lotus to design your own display (see pages 76-79).
After finishing view a graph or plot, press to return to the main worksheet.
52 2. ANALYZING INFORMATION