Cash Flow (Investment Appraisal) - Casio Algebra FX 2.0 PLUS User Manual

2-4 Cash Flow (Investment Appraisal)

This calculator uses the discounted cash flow (DCF) method to perform investment appraisal
by totalling cash flow for a fixed period. This calculator can perform the following four types
of investment appraisal.
• Net present value (
• Net future value (
• Internal rate of return (
• Pay back period (
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
CF
later is shown by
Investment appraisal can be used to clearly determine whether an investment is realizing
profits that were originally targeted.
uNPV
NPV = CF
n
: natural number up to 254
uNFV
NFV = NPV × (1 + i )
uIRR
0 = CF
NPV
In this formula,
however, that minute fractional values tend to accumulate during the subsequent
calculations performed automatically by the calculator, so
IRR
exactly zero.
Cash Flow (Investment Appraisal)
NPV
)
NFV
)
IRR
PBP
)
CF
1
CF
0
, two years later by
1
CF
1
+ +
0
(1 + i ) (1 + i )
n
CF CF
1
+ +
0
(1 + i) (1 + i)
= 0, and the value of
becomes more accurate the closer that
2-4-1
)
CF
5
CF
CF
3
CF
2
4
CF
, and so on.
2
CF CF
2 3
+ + ... +
(1 + i )
2 3
CF
2 3
+ + ... +
(1 + i) (1 + i)
2 3
IRR i
is equivalent to
NPV
NPV
20010101
CF
7
CF
6
CF
. The cash flow one year
0
I %
CF
n
i =
(1 + i )
n
100
CF
n
n
× 100. It should be noted,
never actually reaches
approaches to zero.