CFA CFA General Using Texas Instruments BA II Plus Calculator?

# Using Texas Instruments BA II Plus Calculator?

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• KBaltazar
Participant
• CFA Level 1
0

Can someone tell me what buttons to push on my calculator in order to solve this IRR equation because I think I am doing it the long way not utilizing the actual IRR button?

The Japanese company Kageyama Ltd. is considering whether or not to open a new factory to manufacture capacitors used in cell phones. The factory will require an investment of Â¥1,000 million. The factory is expected to generate level cash flows of Â¥294.8 million per year in each of the next five years. According to information in its financial reports, Kageyamaâ€™s opportunity cost of capital for this type of project is 11 percent. 1.
Determine whether the project will benefit Kageyamaâ€™s shareholders using the NPV rule. 2.
Determine whether the project will benefit Kageyamaâ€™s shareholders using the IRR rule.
NPV=âˆ’1,000+294.8[1âˆ’(1.11) âˆ’5 ]/0.11 NPV=âˆ’1,000+1,089.55=89.55

Because the projectâ€™s NPV is positive Â¥89.55 million, it should benefit Kageyamaâ€™s shareholders.
Solution to 2:
The IRR of the project is the solution to
NPV=âˆ’1,000+294.8[1âˆ’(1+IRR) âˆ’5 ]â€‰/â€‰IRR=0
• Zee Tan
Keymaster
• CFA Charterholder
3

Hey @KBaltazarâ€Œ the category “CFA Practice Questions” is specifically for polls set up as CFA questions for forum members to answer. For future questions like this please categorise either in CFA General, or its respective CFA Level. Thanks!

Participant
• Undecided
2

@KBaltazarâ€Œ
Please refer to the Passed Tense complete BA II Plus calculator guide at: