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Basic Question 3 of 29
A corporation has the following opportunity to invest in a project with a return of $77,000 in one period. The current investment is $69,000. The financial market rate is 12%. What is the NPV and the investing decision?
B. $280; yes
C. -$250; no
A. $250; yes
B. $280; yes
C. -$250; no
User Contributed Comments 16
| User | Comment |
|---|---|
| Done | You have to know how to use your calculator for these problems |
| soarer1 | How do you do this on th BAII Plus? |
| hannovanwyk | HP 10 B so much easier with these calculations than 12c, just a pity they not permitted... |
| JimM | On a BAII Plus: Hit CF 69000 / change sign / Enter (this is CFo, initial cash flow; it's negative 'cause it's an outflow) Down arrow to see C01 (1st period cash flow) 77000 / Enter (positive 'cause it's an inflow) (F01 = 1; single cash inflow of that size) Hit NPV 12 / Enter (this is I, interest rate) Down arrow to see NPV Hit CPT (compute) Result = -250 |
| johnowens | wow, thats a long way about it how about just... PV FCF = 77,000/1 + 12% = 68,750 thats 250 less than the outlay |
| mwali | Can someone please go thru the calculation of NPV using BAII plus. I have been trying the procedures by others but it does not seem to work out.JimM please assist |
| lavalyn | The BA II manual is not bad. You should generally use [2nd][Clr work] before any new calculation. Press CF to enter the cash flow worksheet, clear previous work, then use the instructions by JimM. |
| peteypete | Its not hard if you know the formula and past high school math. |
| EMerkert | Much easier for these simple problems to know the math, and less likely to punch an incorrect button on the calc. |
| Nomni | Can someone assist if you're using HP 12c Platinum |
| dipu617 | BA II Plus: CF0: -69000 [enter] CF1: 77000 [enter] Press NPV I: 12% [enter] Press down arrow Press CPT NPV: -250 |
| papajeff | Doing the quant section first will really help, these calculations are simple if you have practiced using your calculator and understand the theory. |
| johntan1979 | Simple questions like this, don't waste your time using TI BA II Plus. Just remember the formula. It's only 1 period, so it's the 1 period's return over 1+0.12 minus initial investment. |
| jonan203 | Nomni: 69,000 <CHS><g><CFo> 77,000 <g><CFj> 12 <i> 1 <n> <f><NPV> = -250 |
| Bududeen | good job jonan203 |
| Freddie33 | All ya numpties doing dumb shit with calculators when I worked out it had to be negative in 5 seconds and I'm dum |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
describe the capital allocation process, calculate net present value (NPV), internal rate of return (IRR), and return on invested capital (ROIC), and contrast their use in capital allocation
CFA® 2024 Level I Curriculum, Volume 2, Module 5.