Capital Budgeting/Cash Flow Function on BA II

CFA Level II
#1

For question 1 in the CFA text for Reading 22 of the corporate finance book, It asks to figure out the NPV of buying new equipment. This means coming up with the initial outlay, the TNOCF, and annual cash flows. I got all those right, but when calculating the NPV I am not getting the right answer?

The book and I get an outlay of 533,000, CF for years 1-5 of 146,000 and a TNOCF of 124,000. Included is a cost of capital of 10 percent.

I’m inputting

CF0 = -533,000

CF1 = 146,000

F1 = 5

CF2 = 124,000

F1=1

NPV

I = 10

CPT

My answer is 90,449.64, when the answer in the book is 97,449. What am I doing wrong?

#2

In your calculation, the terminal year after tax non operating cash flow occurs in year 6, whereas it should be added to the annual after tax cash flow of year 5. So you should input this in your calculator:

CF0 = -533,000

CF1 = 146,000

F1 = 4

CF2 = 270,000

F1=1

NPV

I = 10

CPT