Using the Texas Instruments BAII Plus

By Steve Benner

**Keys in BOLD represent keystrokes**

Using your calculator for the first time:

Your calculator is initially pre-set to compound interest for 12 periods a year.  You need to change this by   2nd   I/Y   1   Enter   2nd   CPT      Your calculator is now set to compound interest once a year.

Before each new problem:

Every time you do a problem on your calculator, you store the information in its memory.  You must clear the previous data before you begin a new problem.  Before each new problem you should do the following:   2nd   FV   2nd   CE/C     All previous data is now cleared.

Note: when using cash flow functions you must be in the CF function before you do the clearing!

To change decimal places:

To change the number of decimal places displayed simply press   2nd   .   press number of decimal places you want   Enter   2nd   CPT   Your calculator should now displayed the enter amount.

To change between annuity due and ordinary annuity:

Most problems in this class deal with ordinary annuities, which in your calculator are defined as “END.”  Annuities due are defined as “BGN.”  To change between the two, use the following steps:   2nd   PMT   2nd   ENTER   2nd   CPT

Note:  Whenever your calculator is in annuity due mode, the letters BGN are displayed on your calculator screen.   Don’t forget to change it back during calculations!!

Simple PV & FV of \$1 and PV & FV of an annuity:

On your calculator, you should have the following keys:

• N  which represents number of periods
• I/Y  which represents interest per period
• PV  which represents present value
• PMT  which represents payments per period
• FV  which represents future value

To enter these in your calculator, first press the number/amount then the N, I/Y, PV, PMT, or FV key.  You need at least three entered to find a value.  To get the solution you must hit  CPT and then the value you are trying to find.

Example:  Bob wants to know the future value of \$4,000 invested today for five years at 10 percent.

To do this problem you would enter the following:   5   N   10   I/Y   -4000   PV   CPT   FV    You should get a final answer of \$6,442.04 if done correctly.

Note: The PV was entered as a negative because it is an outflow.  Your calculator needs to know what the outflows and inflows are.

Don’t forget to clear those numbers before starting a new problem!!

Uneven Cash Flows, NPV’s and IRR’s:

To enter uneven cash flows into the calculator hit the CF key.  This will take you into the cash flow register.  To move around in the cash flow register, simply use the arrow keys on the top row of your calculator.  CFo stands for initial cash flow (outlay), C01 stands for cash flow year one, C02 stands for cash flow year two, etc.  The F01, F02, etc. can be used if you have the same cash flow occurring for more than one year.  Once all flows are entered you can press the NPV or IRR key to solve.  In the NPV function you must first enter a rate of return, use the arrow keys to navigate to NPV= and then hit CPT.  In the IRR function, just hit CPT.  Try the following examples:

Example 1:  Mary is expecting the following cash flows:

Year 0:    (\$10,000)

Year 1:    \$4,000

Year 2:    \$7,000

# Year 3:\$12,000

Please compute the present value and internal rate of return for the cash flows assuming a rate of 20 percent.

To calculate do the following:

• Go to the cash flow register by pressing CF
• Next clear prior data in that function by pressing 2nd   FV   2nd   CE/C
• Enter the cash flows (use arrow keys to navigate): in CFo:  -10000   Enter  in CO1:  4000   Enter  in CO2:  7000   Enter  in CO3:  12000   Enter
• Finding NPV:   NPV   20   Enter   use your arrow key to navigate to NPV =, then hit CPT   If done correctly, you should get an NPV of \$5,138.89.
• Finding IRR:   IRR   CPT   If done correctly your final answer will be 45.17%

In the next example we will use the FO1 function.  Note that this problem can be solved using the same steps as above if preferred.  In other words, you don’t have to use the FO1 function; rather you could enter the flows separately in CO1, CO2, and CO3.

Example 2:  Jane is expecting the following cash flows:

Year 0:    (\$4,000)

Year 1:    \$2,000

Year 2:    \$2,000

# Year 3:\$5,000

Please compute the present value and internal rate of return for the cash flows assuming a rate of 5 percent.

To calculate do the following:

• Go to the cash flow register by pressing CF
• Next clear prior data in that function by pressing 2nd   FV   2nd   CE/C
• Enter the cash flows (use arrow keys to navigate): in CFo:  -4000   Enter  in CO1:  2000   Enter  in FO1:  2   Enter  in CO2:  5000   Enter    Note: by using F01, the flow you used in CO1 became the cash flows in years 1 and 2, therefore causing CO2 to be the flow in year 3
• Finding NPV:   NPV   5   Enter   use your arrow key to navigate to NPV =, then hit CPT   If done correctly, you should get an NPV of \$4,038.01.
• Finding IRR:   IRR   CPT   If done correctly your final answer will be 44.48%