Sharp EL733A EL-733A Operation Manual - Page 57

This is what your sketch of the cash-flow schedule should look like: 6'000+ i = 18% APR (+12) 10'000 10'000 6'000+ 6'000+ 10'000 111- year 1 year 2 year 3 The part of any NPV or IRR calculation that takes the most keystrokes is describing the cash-flow schedule to your calculator. An important thing to notice before you start keying in the above cash-flow schedule is that the group at the beginning of the first year (cash-flow group zero) consists of six cash-flows of zero each, while the groups at the beginning of the second and third years have only five cash-flows of zero each. The keystrokes necessary to key in the above cash-flow schedule are as follows: (Mode: FIN) 12ndF) CA 6 RI Ni noo 3 [2nd$ Ni 0 Cash-flow group 0 Cash-flow group 1 Cash-flow group 2 110 3 (2ndFJ Ni 10'000 5 (2nd9 Nij 0 6'000 3 (2ndn Ni 0 3 (2ndFl Ni 10'000 0 5 RI Ni 0 61000 CH 3 NH Ni 0 3 Ni 10'000 Cash-flow group 3 Cash-flow group 4 Cash-flow group 5 Cash-flow group 6 Cash-flow group 7 Cash-flow group 8 Cash-flow group 9 Cash-flow group 10 Cash-flow group 11 Once you have the cash-flow schedule stored in your EL-733A, to calculate the NPV given an interest rate of 18%, simply press: 18 2nd H4 El NPVJ Result: 78'505.16 So, if you want to make an 18% APR return on your investment by buying that contract at the New Year's Eve party, you should pay $78'505.16 Notice that the result of sliding all those positive cash-flows to the beginning of the time-line and discounting them according to the 1.5% periodic rate, is a positive value. Unlike the TVM functions j) and E, the NPVJ function makes no assumptions as to why you are using it to slide cash-flows. (NPVJ does not change the signs of cash-flows as it slides them to the front of the cash-flow schedule. 111