Investment Appraisal - Casio FX-9750G PLUS User's Manual & Technical Reference

19-4 Investment Appraisal

This calculator uses the discounted cash flow (DCF) method to perform invest-
ment appraisal by totalling cash flow for a fixed period. This calculator can perform
the following four types of investment appraisal.
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
flow one year later is shown by
Investment appraisal can be used to clearly determine whether an investment is
realizing profits that were originally targeted.
uNPV
n
uNFV
uIRR
In this formula,
noted, however, that minute fractional values tend to accumulate during the
subsequent calculations performed automatically by the calculator, so
actually reaches exactly zero.
approaches to zero.
• Net present value (
NFV
• Net future value (
• Internal rate of return (
PBP
• Pay back period (
CF
CF
NPV = CF +
0
(1 + i)
: natural number up to 254
NFV = NPV × (1 + i )
CF
1
0 = CF +
0
(1+ i)
NPV
= 0, and the value of
NPV
)
)
IRR
)
)
CF
CF
3
CF
2
CF
1
0
CF
, two years later by
1
CF CF
1 2
+ +
(1 + i) 2 (1 + i)
I
i =
100
n
CF CF
2 3
+ +
(1+ i) (1+ i)
2 3
IRR
IRR
becomes more accurate the closer that
CF
CF
7
5
CF
6
4
CF
CF
, and so on.
2
CF
3
n
+ ... +
3 (1 + i)
n
CF
n
+ ... +
(1+ i)
n
i × 100. It should be
is equivalent to
. The cash
0
NPV
never
NPV
337