To calculate any time video of money calculations it is important to make sure that your calculator settings are correct first thing is you need to clear everything that's in the calculator on the hp10 be you would have to second function and press that clear all the next thing unity check is the number of periods that it's actually compounding in as i clear all you notice that on mine it's compounding at 12 periods per year which is not what i'm trying to do in this particular example that i'm showing you i want to show one period pay.
How i fix it on the HP is i would press one and i go second function and I would look for that but in the pay period button.
It's that one under payment period fear and then I would press that and to just make sure that it's clear if you go second function here you'll see it's now one period pay you these are the cash flows that will be dealing with in year one you've got 605 695 834.
On to year for. This is a net present value that you get when you're calculating with the discounting factors which obviously because of rounding factors would be slightly incorrect but it's acceptable in an exam if you are using a calculator how you would go about doing that is by using your cash flows and your net present value buttons so. This is your cash flow there's a net present value and you'd also need to input your interest rate that you're working at.
In our example the interest rate that you're working at is twenty-eight percent as shown there.
I press 28 and i put interest per year in year zero there is no cash flow.
I will put zero and i'll press their cash flow button.
That is here zero year to year one the cash flow is 60 five thousand 605 one two three and i press that cash flow a year to its 695 750 and I press the cash flow but it in a three it's 834 900 when i press the cash flow button in air for its forty four thousand five twenty eight thousand yes and I press the cash flow party and to compute the net present value on the HP you just need to press the button on some calculators like the shop you'll have to press the compute button first before you press NPV.
In this case because it's arranged as you can see I have to press the second function net present value and you get that the net present value for this particular calculation is 17 million 883 392 which is slightly off from that one using the discounting factors because the discounting factors are already rounded to three decimal points.