Operation Manual

Cash Flows

Analyzing Cash Flows

The various functions used to analyze cash flows are located in the NPV P and IRR R

menus. If you press

R or P before entering cash flows, you will be redirected to the

cash flow menu to enter values into the cash flow list. The menu maps for the IRR and NPV

menus are shown in Figure 2. Table 5-3 describes the items within these menus. The results

shown in Table 5-4 are based on the values entered in the cash flows as shown in Table 5-2.

Table 5-3 Analyzing Cash Flows

*Does not apply to the HP 20b.

Item Description

Inv. l% Investment or discount rate. Enter the investment rate or discount rate for the cash

flow followed by

I. This rate must be entered in both the NPV and IRR

menus.*

NetPV Net Present Value. Shows the value of the cash flows at the time of the initial cash

flow, discounting the future cash flows by the value set for Inv. I%.

NetFV Net Future Value. Shows the value of the cash flows at the time of the last cash flow,

discounting the earlier cash flows by the value set for Inv. I%.

NetUS Net Uniform Series. Shows the per-period payment of a regular, periodic cash flow

of equivalent present value to the cash flow list.

Payback Payback. Shows the number of periods for the investment to return value.

Discounted Payback Discounted Payback. Shows the number of periods required for the investment to

return value if the cash flows are discounted using the value set in Inv. I%.

Total The sum of all the cash flows, equivalent to NPV if Inv. I% is 0.

#CF/Yr The number of cash flows per year. The default is 1.

IRR% Internal Rate of Return. This is the discount rate that returns a Net Present Value for

the entered cash flows.

Safe I%*

Safe Interest Rate. Enter the safe investment rate followed by

MIRR* Modified Internal Rate of Return. Used primarily when there is more than one sign

change in a series of cash flows to evaluate the overall profitability of an

investment.

FMRR* Financial Management Rate of Return. Used primarily when there is more than one

sign change in a series of cash flows to evaluate the overall profitability of an

investment.