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HP 20b Business Function - Cash Flows

Cash flow is a term that refers to the amount of cash being received and spent by a business during a defined period of time, sometimes tied to a specific project. Measurement of cash flow can be used to evaluate the state or performance of a business or project. Cash flow can be used to validate the net income generated by accrual accounting.

Cash Flow Diagram

On the HP20b, a cash flow list is a set of numbered pairs, CF(n)and#CF(n), where n is the index of the cash flow list. Each pairrepresents a single cash flow. CF(n) represents the monetary value ofthe cash flow; #CF(n) is the number of consecutive occurrences of that cash flow. By default, #CF(n) is equal to 1, as most cash flows occur only once. However, in cases where a cash flow is repeated multiple times in a list, using #CF(n) instead of entering thecash flow value multiple times can save you time and memory space inthe calculator.

Press [CshFl] key will open the cash flow list on HP 20b. Press [INPUT] will inputs current values to variables in the cash flow list as well as the Net Present Value (NPV) and Internal Rate of Return (IRR) menus.

Press [Up Arrow] or [Down Arrow] to scroll up and down.

[INS] to inserts cash flows into a cash flow list.

[DEL] to remove cash flows from a cash flow list.

Press [IRR] or [NPV] to open Internal Rate of Return (IRR) and Net Present Value (NPV) menus.

Typical Cash Flows Problem: After an initial investment of $80,000.00, you expect returns over the next five years as follows: cash flow 1 $5,000.00; cash flow 2 $4,500.00; cash flow 3, $0.00; cash flow 4 $4,000.00; cash flow 5 $5,000.00 for 5 times; cash flow 6 $115,000.00. Given this information, calculate the total of the cash flows and the internal rate of return (IRR) of the investment. Calculate net present value (NPV) and net future value (NFV), assuming an annual investment interest rate of 10.5%.

Using HP 20b (in RPN Mode) to provide the above Cash Flows Solution in 2 parts.

Cash Flows Solution Part 1 - Data Entry:

  • Press [CshFl] key to open the cash flow list starting with the current value of the initial cash flow, CF(0).
  • Enter 80000 and press [+/-] [INPUT] to enter -80000 (sign of the cash outflow is negative) as the value of the initial cash flow. The screen will displays the current value, 1, for the frequency of CF(0).
  • Press [INPUT] to input the current value of 1 for the frequency of CF(0). Displays the current value of CF(1).
  • Enter 5000 and press [INPUT] [INPUT] as the value of CF(1).
  • Enter 4500 and press [INPUT] [INPUT] as the value of CF(2).
  • Enter 0 and press [INPUT] [INPUT] as the value of CF(3).
  • Enter 4000 and press [INPUT] [INPUT] as the value of CF(4).
  • Enter 5000 and press [INPUT] and key in 5 [INPUT] as the value of CF(5).
  • Enter 115000 and press [INPUT] [INPUT] as the value of CF(6).

Cash Flows Solution Part 2 - Data Analysis:

  • Press [NPV] key to open NPV menu starting with current value of Inv.I%.
  • Enter 10.5 and press [INPUT] to enter value of 10.5 as current Inv. I%.
  • Press [Down Arrow] key once to scroll to current value for NPV which is -14182.80.
  • Press [Down Arrow] key once to scroll to current value for NFV which is -38493.26.
  • Press [Down Arrow] key once to scroll to current value for Net US which is -2357.99.
  • Press [Down Arrow] key once to scroll to current value for Payback which is 9.36.
  • Press [Down Arrow] key twice to scroll to current value for Total which is 73500.00.
  • Press [IRR] it returns current value for IRR which is 7.90.

Updated On: 13.09.15

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