FIN313HowtoUsetheCashFlowRegister

FIN313HowtoUsetheCashFlowRegister - I I = The Interest Rate...

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Finance 313 Richey How to Use the Cash Flow Register Use the PMT key when the Cash Flows are of equal amounts. However, you must use the Cash Flow Register when the Payments are not equal. Here is the timeline breakdown to handout problem #7, Present Value of an uneven cash flow stream. I’ve also included the formula answer for all of you “quant” lovers. Different streams: C 1 =1,000; C 2 =1,300; C 3 =900; r=0.03; {Value at t=0}? 0 1 2 3 1,000 1,300 900 {C 1 ’s value at t=0} + {C 2 ’s value at t=0} + {C 3 ’s value at t=0} 61 3,019.8759 0.03) (1 1 900 0.03) (1 1 1,300 0.03) (1 1 1,000 3 2 1 + × + + × + + × = Using the Cash Flow Register CF = Cash Flow CFo = Cash Outflow (used for purchases such as machines, factories, etc.) CO1, CO2, CO3, and … etc. = Cash Inflows FO1, FO2, FO3, and … etc. + Frequency of the Cash Flow NPV = Net Present Value = the present value of all future Cash Flows discounted back at
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Unformatted text preview: I I = The Interest Rate or Discount Rate Problem #7 1. Push the CF button (This opens the Cash Flow Register). 2. You’ll see CFo (Don’t enter anything because you don’t have a CFo). 3. Push the ↓ key (You’ll see CO1) 4. Push 1000 Enter and Push the ↓ key (You’ll see FO1) 5. Push 1 Enter and Push the ↓ key (You’ll see CO2) 6. Push 1300 Enter and Push the ↓ key (You’ll see FO2) 7. Push 1 Enter and Push the ↓ key (You’ll see CO3) 8. Push 900 Enter and Push the ↓ key (You’ll see FO3) 9. Push 1 Enter and Push the ↓ key (You’ll see CO4) 10.Don’t enter anything; you only have three cash inflows. 11. Push CPT and NPV (You’ll see I = 0) You need an interest rate! 12. Push 3 Enter and Push the ↓ key (You’ll see NPV = 0) 13. Push CPT and you should get NPV = 3,019.875962...
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