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66 Section 4: Additional Financial Functions
File name: hp 12c_user's guide_English_HDPMBF12E44 Page: 66 of 209
Printered Date: 2005/7/29 Dimension: 14.8 cm x 21 cm
Note: If you change the number in the n register in order to change an N
j
,
be sure to reset the number in the n register to the total number of cash flow
amounts originally entered (not including the amount of the initial investment
CF
0
). If this is not done, NPV and IRR calculations will give incorrect results.
Example 1:
With the cash flows now stored in the calculator, change CF
2
from
$11,000 to $9,000, then calculate the new NPV for a 13
1
/
2
% return.
Keystrokes Display
9000?2
9,000.00
Stores the new CF
2
in R
2
.
13.5¼
13.50
Stores i.
*
fl
–644.75
The new NPV.
Since this NPV is negative, the investment would decrease the financial value of
the investor’s assets.
Example 2:
Change N
5
from 2 to 4, then calculate the new NPV.
Keystrokes Display
5n
5.00
Stores j in the
n
register.
4ga
4.00
Stores the new N
5
.
7n
7.00
Resets the number in the
n
register
to its original value.
fl
–1,857.21
The new NPV.
Bond Calculations
The hp 12c enables you to solve for bond price (and the interest accrued since the
last interest date) and the yield to maturity.
The
E
and
S
calculations are
done assuming a semiannual coupon payment and using an actual/actual basis
(such as for U.S. Treasury bonds and U.S. Treasury notes). In accordance with
market convention, prices are based on a redemption (par) value of 100.
*
This step is necessary in this example because we have calculated IRR since the first time we
calculated NPV. The IRR calculation replaced the 13.5 we keyed into i before calculating
NPV with the result for IRR – 13.72.
All bond calculations are performed in accordance with. the Securities Industry Association’s
recommendations as contained in Spence, Graudenz, and Lynch, Standard Securities
Calculation Methods, Securities Industry Association, New York, 1973.
66


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