NPV/IRR Calculator Questions

@vincentt I initially had it that way with the last cash being the $350,000. I just wasn’t entirely sure from reading the question when exactly they were going to sell it relative to receiving the last cash flow. But I agree with your answer.

I’m hooked to the HP12c as well… call me “old school”… 😉

I think the calculation should be as follows (highlighted in bold are the differences to @dr_pain28 ‘s answer):

CF0=-$550,000
C01=$65,000
F01= 5 (We will receive the identical $65,000 for 5 straight years)
C02= $50,000
F02= 3 (We will receive the $50,000 cash flow for 3 years)
C03= $350,000
F03= 1

The question mentioned that it will sell the property for $300k after the 9th year which is when it receives the last payment of $50k hence it should be $350k instead of $300k.

So the NPV should be -$53,765 and IRR should be 7.015%.

I use the HP 12c, but there is a Charterholder who uses a TI in all his problem sets; search “Ronald Moy CFA” on youtube.

Can you please tell me how to use the HP12c for this question ? Thanks

@CFA_redemption_12713 Do you by chance have a correct answer to the question so we can check our work?

I got IRR=6.66% NPV= -$65,169.64

I got these numbers by first using the Cash Flow register (CF) on your calculator immediately above the I/Y button.

CF0=-$550,000
C01=$65,000
F01= 5 (We will receive the identical $65,000 for 5 straight years)
C02= $50,000
F02= 4 (We will receive the $50,000 cash flow for 4 years)
C03= $300,000
F03= 1

Hit the “IRR” button (above payment) and hit ‘CPT’ to get the IRR of 6.66%.

Hit ‘NPV’ (above present value), put in 9% for the Interest. Down scroll to read NPV, then hit compute to get -$65,169.64

I hope that i did this correctly and got the answers that the book gave. If I didn’t, post the correct answers and I’ll try to help figure out where I went wrong. I hope that this helps.

@dr_pain28 we’ll just wait for the answer and see.

@Dr_Pain28 thank you!!!! I’ve been trying to figure out why this hasn’t worked for me for days and ur post just explained that I need to hit IRR first BEFORE CPT. Brilliant, I can sleep well tonight 🙂