Calculator Supplement v.1a Pg.

1
Calculator Supplement

While formulas are nice, even better is knowing how to use your calculator

The below assumes you know how to use your calculator do to basic math. The below are some
extra items you need to know.

Setting up your calculator

HP 12C HP 10BII TI BAII Comments

Set the number of decimal places to [3].
f 3 Gold DISP 3 2
nd
Format 3
ENTER CE/C
The 10BII had Gold and Blue shift
keys.

Set the number of compounding periods per n to 1.
(Not Applicable) 1 Gold P/YR 2
nd
P/Y 1 ENTER
2
nd
QUIT
The default factory setting on the
10BII is for 12 periods per n.

Set the cash flows to end of period mode.
g END Gold BEG/END
(toggles back
and forth)
2
nd
BGN 2
nd
SET
C/CE
(toggles back
and forth)
End is the default you only need
to shift to End if BEGIN or
BGN is shown on the screen.

How to change the sign of an entry from positive to negative.
CHS +/- +/-

How to clear the memory (before every calculation).
f REG Gold C ALL CE/C
2
nd
CLR TVM
2
nd
CLR WORK



Know how to use the exponent function

Example: a) 4 taken to the 5
th
power (i.e. 4
5
)

b) the cube root of 90 (i.e. 90
1/3
, or 90
0.333
)

HP 12C HP 10BII TI BAII Comments

a) Simple use of exponent
4 ENTER 4 Gold y
x
4 y
x

5 y
x
5 = 5 = Result is 1024

b) Using the reciprocal of a number
90 ENTER 90 Gold y
x
90 y
x

3 1/x 3 Gold 1/x 3 1/x Transforms 3 into 0.3333
y
x
= = Result is 4.481

The HP 12-C puts a number in the X register, and when the next number is entered, the first is
pushed down to the Y register. Hitting y
x
is the same as calculating Y to the exponent X

Calculator Supplement v.1a Pg. 2
Know how to use the weighted average function

Example: Item Value Weight
A 20 15%
B 10 40%
C 5 45%
100%

HP 12C HP 10BII TI BAII Comments
20 ENTER 20 INPUT
.15 + .15 +
10 ENTER 10 INPUT
.40 + .40 +
5 ENTER 5 INPUT
.45 + .45 +
No shortcut
multiply the
values times the
% weights, and
sum the results.

g xw Gold xw Result: 9.25

On the HPs, think to yourself:
20 at a weight of 15 20 ENTER/INPUT, 15 + (calc display shows 1)
10 at a weight of 40 10 ENTER/INPUT, 40 + (calc display shows 2)
5 at a weight of 45 5 ENTER/INPUT, 45 + (calc display shows 3)
g (or Gold) xw produces a weighted average of 9.25


Know how to use the TMV (Time Value of Money) keys

1) Clear your machine. 2) Hit any 3 (or 4) of the 5 keys n, i, PV, PMT, FV.
The calculator will assume anything not entered is equal to zero (ie: PMT of zero, PV of
zero, etc.) 3) Then, hit the remaining key to determine its value.

The i, I/YR, or I/Y calculated is an IRR it is the compound rate for the number of
periods n. For a bond calculation this is the basis of the Yield to Maturity.

Example: Invest $900 to buy a $1000 face value bonds with an 8% coupon, paid semi-
annually, maturing in five years. What is the Yield? (Note: for the below,
the calculators are set for one compounding per period, and n is number of
periods, not number of years.)

HP 12C HP 10BII TI BAII Comments
900 CHS PV 900 +/- PV 900 +/- PV The initial investment is entered as a
negative number
40 PMT 40 PMT 40 PMT 8% coupon paid semi-annually is 4%
each period
1000 FV 1000 FV 1000 FV Full par value will be paid at maturity
10 n 10 N 10 N 5 years, paid semi-annually, is 10
cash flows
i I/YR CPT I/Y Result is 5.31 - this is the semi-annual
rate (which is an IRR). Multiply by 2
to get the Bond Equivalent Rate.

HP 12C Notes: DONT hit f-IRR to get the Yield to Maturity you will get an
error. The functions f-IRR and f-NPV need to have their cash flows provided via
the g-CFo g-CFj and g-Nj entry sequence.

The f-INT key relates to the transformation between 365 and 360 day calculation
conventions it is NOT related to the interest on a series of cash flows.
Calculator Supplement v.1a Pg. 3
Know how to calculate the NPV and IRR of a stream of cash flows

NPV and IRR require a series of cash flows to be entered individually.

Example: A cash flow sequence of -30, 15, 10, 10, and two simultaneous final cash
flows of 3 and 2. A discount rate of 6%

HP 12C HP 10BII TI BAII Comments

Clear your machine before any calculation.
f REG Gold C ALL 2
nd
CLR TVM
2
nd
CLR WORK


Enter the Cash Flows
30 CHS g CFo 30 +/- CFj CF 2
nd
30 +/-
ENTER

15 g CFj 15 CFj 15 ENTER
10 g CFj 10 CFj 10 ENTER
2g Nj 2 Gold Nj 2 ENTER Note that you can indicate repeats of
the same cash flow very helpful for
situations where the cash flow repeats
4 or 5 times!
3 ENTER 3 + 3 +
2 + g CFj 2 = CFj 2 = ENTER The two simultaneous cash flows are
summed, and then entered into the
cash flow registers.

Calculate the IRR
f IRR Gold IRR/YR IRR CPT Result is 15.075

Calculate the NPV
6 i 6 I/YR NPV 6 ENTER
f NPV Gold NPV CPT Result is 5.408



The 12C has a separate key used for cash flow zero. For the others, the first
cash flow entered is presumed to be period zero. If there is no cash flow in
period zero, you must enter 0 otherwise you will be off by one period.

Calculator Supplement v.1a Pg. 4
Time Value of Money on a Financial Calculator

There are 5 time value of money variables:

PV Present Value
FV Future Value
PMT Equal payments from period 1 to period n
n number of periods of cash flow
i the interest rate / discount rate applied per period

These, and the entry of individual cash flows can be viewed as follows:



Time Period: 0 1 2 .. n
PV PMT there must be one
sign change among
FV PV, PMT and FV
n number of time periods
i periodic rate = (nominal annual rate) / (payments per year)
Time Period: 0 1 2 .. n
CFo CFj CFj CFj CFj Some calculators without a Cfo key require that
if CFo = 0, it must be entered as the first CFj
IRR To calculate an IRR, there must be one sign change
i & NPV Enter periodic rate to calculate NPV