I’ve been staring at this problem and I think I’m going crazy. From the CFA Curriculum, Reading 28, problem 23 (page 79 of volume 3). It says to find out which grinder to recommend based on either NPV or EAA. They give you the NPV of the Pinto Grinder as $30,691. But i’m calculating $86,108. What am I doing wrong? Initial Outlay = $100,000 Annual ATOCF = $45,000 After tax salvage value = $25,000 3 year life. I’m putting in: CF0 = -100,000 CF1 = 45,000 CF2 = 45,000 CF3 = 70,000 (45k + 25k) i = 10% hit NPV, I get $86,108. Any ideas what I’m missing here?
possibly have some old cash flows sitting in your registers. make sure you do 2nd CF 2nd CLR WORK (CE|C) button then enter your cash flows as above
i think that solved it… i was going crazy here! thanks!
your calculator must be f’d. i just did those #'s and got 30,691.20962 CFO = -100k CF1 = 45k (i did F01 = 2 instead of doing 45k twice but whatever, should work either way) CF2 (or you’d have your CF3 here) = 70k I = 10 (did you do 10 and not .1?) calc NPV. i’d say clear your cash flows and give it a whirl again- i don’t even have the problem in front of me but i banged in your #'s and got the 30k and change NPV.
yeah i dont know why it didn’t clear it the first few hundred times i tried… on my HP12c, i hit CLX, then i hit f+CLX (clears REG), and then i hit f+FIN (clear FIN). isn’t that enough?
also remember you are hitting enter after the last cash flow. then you can press the NPV button, it should ask you for I, put I in and hit enter, then press the down arrow so that it shows npv=0 and then press CPT (compute). i think thats the order
i don’t mess with HP12c’s so i can’t help you. that RPN stuff is not for me. i’m left handed, enough of my life is backwards enough already.
I have mine set to ALG mode instead of RPN, but should not matter. f clx 100 chs g cf0 (PV) 45 g cfj (pmt button) 2 g nj (fv button) 70 g cfj 10 i f NPV 30.691
I’m under 35, therefore RPN to me is like msn messenger to my dad =)