The 12C also has keys labeled CF0 and CFj (the cash flow keys) to handle a series of uneven cash flows.
Suppose that you are offered an investment which will pay the following cash flows at the end of each of the next five years:
How much would you be willing to pay for this investment if your required rate of return is 12% per year?
We could solve this problem by finding the present value of each of these cash flows individually and then summing the results. However, that is the hard way. Instead, we’ll use the cash flow keys. All we need to do is enter the cash flows exactly as shown in the table. Again, we must clear the cash flow registers first. In this case we need to press f then X>< P>
Now suppose that we wanted to find the future value of these cash flows instead of the present value. There is no key to do this so we need to use a little ingenuity. Realize that one way to find the future value of any set of cash flows is to first find the present value. Next, find the future value of that present value and you have your solution. In this case, we’ve already determined that the present value is $1,000.17922. Clear the financial keys (f X>
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Updated On: 15.07.14