1. Internal Rate of Return (IRR) and Net Present Value (NPV)

2. IRR and NPV

3. IRR and NPV HP 10B Keystrokes Clears registers One payment per year PV = -$ 28,371 FV = $ 50,000 FV in 5 years Solve for IRR

4. IRR and NPV

5. IRR and NPV HP 10B Keystrokes Clears registers One payment per year $50,000 future value Discount rate = 15% FV in 5 years Compute present value Subtract $28,371

6. IRR and NPV

7. IRR and NPV HP 10B Keystrokes Clears registers Monthly compounding PV = - $28,371 Monthly pmt = $445.66 96 months Compute IRR

8. IRR and NPV

9. IRR and NPV HP 10B Keystrokes Clears registers Monthly payments Monthly pmt = $445.66 Annual discount rate = 10% 96 monthly payments Compute PV Subtract $28,371

10. IRR and NPV

11. IRR and NPV HP 10B Keystrokes Clears registers Monthly payments PV = -$96,000 Monthly pmt = $1,028.61 FV = $97,662.97 60 months Compute yield (IRR)

12. IRR and NPV

13. IRR and NPV HP 10B Keystrokes Clears registers Monthly payments Monthly pmt = $1,028.61 FV = $97,662.97 60 months of payments Discount rate = 13.1047% Compute PV Subtract $96,000

14. IRR and NPV

15. IRR and NPV HP 10B Keystokes Clears registers One payment per year Initial CF = - $100,000 1st CF = $ 20,000 2nd CF = $ 35,000 3rd CF = $ 75,000 Compute yield (IRR)

16. IRR and NPV

17. IRR and NPV HP 10B Keystrokes Clear registers One payment per year Initial CF = - $ 10,000 1st CF = - $ 8,000 2nd CF = - $ 5,000 3rd CF = $ 15,000 4th CF = $ 25,000 Discount rate = 10% Compute net present value

18. IRR and NPV

19. IRR and NPV HP 10B Keystrokes Clears registers One payment per year Initial CF = - $ 92,725.60 1st grouped CF = $ 10,000 Occurs three times 2nd grouped CF = $ 15,000 Occurs twice 3rd CF = $ 100,000 (once) Compute the yield (IRR)

20. IRR and NPV

21. IRR and NPV HP 10B Keystrokes Clear registers Monthly payments Initial CF = - $98,000 1st grouped CF = $791.38 Occurs 12 times 2nd grouped CF = $850.73 Occurs 12 times 3rd grouped CF = $914.54 Occurs 11 times 4th CF = $107,491.18 (once) Discount rate = 13% Compute net present value