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*

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*

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%

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