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This document provides instructions for using a HP12c financial calculator. It discusses:
1) How to display a specific number of decimal places and ensure cash flows begin in period 1.
2) How to enter calculations for addition, multiplication, division and subtraction.
3) How to store values in the calculator's memory registers and recall stored values.
4) How to calculate present value, payments, and other values for constant cash flows using the calculator's functions.
5) How to enter variable cash flows into registers and then use the calculator to find NPV and IRR.
This document provides instructions for using a HP12c financial calculator. It discusses:
1) How to display a specific number of decimal places and ensure cash flows begin in period 1.
2) How to enter calculations for addition, multiplication, division and subtraction.
3) How to store values in the calculator's memory registers and recall stored values.
4) How to calculate present value, payments, and other values for constant cash flows using the calculator's functions.
5) How to enter variable cash flows into registers and then use the calculator to find NPV and IRR.
This document provides instructions for using a HP12c financial calculator. It discusses:
1) How to display a specific number of decimal places and ensure cash flows begin in period 1.
2) How to enter calculations for addition, multiplication, division and subtraction.
3) How to store values in the calculator's memory registers and recall stored values.
4) How to calculate present value, payments, and other values for constant cash flows using the calculator's functions.
5) How to enter variable cash flows into registers and then use the calculator to find NPV and IRR.
Also, to be sure constant cash flow streams begin in the first period (end of the current period) make sure the word BEGIN does not appear on the display. If it does, type f 8 (i.e., END). 1.
x + y: x Enter y +
for multiplication, division or subtraction, substitute or for +.
2.
ab: a Enter b yx
e.g., effective annual rate of return corresponding to an APR of 10% compounded
monthly: need to calculate (1 + 0.1/12)12 - 1. To do this, type 0.1 Enter 12 1 + (This should give you 1.00833) followed by 12 yx 1 3. To store a value that is currently displayed, type STO n where n is the register (memory place) in which the displayed number will be stored. To recall the stored number, type RCL n where n is the registered in which your number is stored. e.g., type 453 followed by Enter. The number 456.00 should be displayed. Now type STO 1 followed by CLX to clear the display. The number 456.00 is now stored in register #1. To recall it, type RCL 1. 4. Constant cash flows with or without a face value: type the information to any four of the following inputs followed by the corresponding function. Pressing on the fifth button will calculate its value. 1) #payments is N type N followed by n. 2) (constant) discount rate is r% type r followed by i. 3) Present Value is V type V followed by CHS followed by PV. 4) Constant payment amount is C type C followed by PMT. 5) Face value is P (0 in case of an annuity, and the principle in case of a
bond) type P followed by FV.
Particularly Relevant Examples: A) To find the present value of an annuity that pays $10 every month for 30 years at a monthly compounded APR of 10%, use n = 360, r = 10/12, C = 10, and P=0. After entering these inputs, pressing on PV should give the correct answer (the present value is $1,139.51). B) To find the present value of a bond that pays $10 every month for 30 years at a monthly compounded ytm of 10%, and matures with a principle of $100, do the same as above but use P=100 (the present value is $1,144.55). C) To find the quarterly payments corresponding to a 5-year annuity with present value 100 and a true effective quarterly discount rate of 2%, use n = 20, r = 2, V = 100, and P=0. After entering these inputs, pressing on PMT should give the correct answer (ans. 6.116). D) To find the quarterly coupons corresponding to a 5-year bond with present value at par (i.e., 100) and a true effective ytm of 2.00%, do as in example (C) but use P=100 (ans. 2.00). E) To find the ytm of a 7-yr 12% coupon bond semi-annually and selling at 112.3 use n = 14, C = 6, V = 112.3, and P=100. After entering these inputs, pressing on i should give the ytm per 6-mo period (ans. 4.775%). To annualize this number (i.e., quote the ytm as an APR) you must multiply by 2 (ans. 9.55%). 5. NPV and IRR of variable cash flow streams: first enter the cash flow values into the appropriate registers. If you will receive C0, C1, C2,, CN, in dates 0 to N, enter C0 followed by g PV (i.e., CF0 ) and then sequentially enter the remaining cash flows by pressing Ck followed by g PMT (i.e., CFj ) for each k = 1,,N. note: the nth cash flow will be stored in the nth memory register and will wipe out anything that is currently stored there. To be sure that the nth cash flow is properly entered, you can review the content of that registry by typing RCL n where n is the period whose cash flow you wish to review. After properly entering the cash flow, you can calculate the NPV given a constant discount rate of r by pressing r i f PV (i.e., r i NPV). If an IRR exists, you can calculate it for the cash flows by typing f FV (i.e., IRR). You can give the HP12c an initial guess for the IRR by keying in the guess, typing RCL g R/S followed by IRR.