HP HP12C hp 12c_user's guide_English_E_HDPMBF12E44.pdf - Page 179

Appendix B More About L Given a sequence of positive and negative cash flows, we hope that there is enough information to determine whether an IRR answer exists, and what that answer is. For the vast majority of cases, your hp 12c will find the unique IRR answer if it exists. But the IRR computation is so complex that if the cash flow sequence does not meet certain criteria, then sometimes the calculator is unable to determine whether or not an answer or answers exist. Let's look at all of the possible outcomes of IRR as calculated by your hp 12c: Case 1: A positive answer. If a positive answer is displayed, it is the only such answer. One or more negative answers may also exist. Case 2: A negative answer. If a negative answer is displayed, there may be additional negative answers, and there may be a single positive answer. If additional answers (negative or positive) exist, they can be calculated using the procedure described below. Case 3: The calculator displays Error 3. This indicates that the computation is very complex, possibly involving multiple answers, and cannot be continued until you give the calculator an estimate of IRR. The procedure for doing so is described below. Case 4: The calculator displays Error 7. This indicates that there is no answer to the computation of IRR with the cash flow amounts you have entered. This situation is probably the result of a mistake in entering the magnitudes or signs of the cash flows or the number of times a cash flow amount occurs consecutively. Refer to Reviewing Cash Flow Entries (page 64) and Changing Cash Flow Entries (page 65) to check and correct the entries. Error 7 will result if there is not at least one positive cash flow and at least one negative cash flow. Although the calculator will eventually reach one of the above outcomes, it may take a long time to get there. You may wish to terminate the IRR iterative process, by pressing any key, to see what interest rate the calculator has computed at that point. If you stop the calculation, you may continue searching for IRR as described below. Searching for IRR. You can continue searching for IRR solutions, even after an Error 3 indication, as follows: 1. Make a guess for the interest rate and key it in. 2. Press:gt. 179 File name: hp 12c_user's guide_English_HDPMBF12E44 Printered Date: 2005/7/29 Page: 179 of 209 Dimension: 14.8 cm x 21 cm