User Manual
2: TVM and Amortization Worksheets 45
Example: Present Value of Annual Savings
Procedure Keystrokes Display
Set all variables to defaults.
&
}
!
RST 0.00
Set payments per year to 1.
&
[
1
!
P/Y= 1.00
Return to calculator mode.
&
U
0.00
Enter interest rate per cash
flow period.
10
-
I/Y= 10.00
Enter 1st cash flow.
5000
S
0
FV= -5,000.00
Enter period number of 1st
cash flow.
1
,
N= 1.00
Compute present value of 1st
cash flow.
%
.
PV= 4,545.45
…
Store in
M1
.
D
1
Enter 2nd cash flow.
7000
S
0
FV= -7,000.00
Enter period number.
2
,
N= 2.00
Compute present value of 2nd
cash flow.
%
.
PV= 5,785.12
…
Sum to memory.
D
H
1
Enter 3rd cash flow.
8000
S
0
FV= -8,000.00
Enter period number.
3
,
N= 3.00
Compute present value of 3rd
cash flow.
%
.
PV= 6,010.52
…
Sum to memory.
D
H
1
Enter 4th cash flow.
10000
S
0
FV= -10,000.00
Enter period number.
4
,
N= 4.00
Compute present value of 4th
cash flow.
%
.
PV= 6,830.13
…
Sum to memory.
D
H
1
Recall total present value.
J
1 23,171.23
Subtract original cost.
B
23000
N
171.23
The present value of the cash flows is $23,171.23, which
exceeds the machine’s cost by $171.23. This is a profitable
investment for the company.