How Do You Find Net Present Value (NPV) With The BA II Plus Financial Calculator?
Net Present Value (NPV) is a method used in capital budgeting to evaluate whether a potential project should be accepted or rejected. Finding NPV on paper can be a tedious process. Mistakes can be easily made because one must discount each cash flow to the present value. Therefore, following these steps with the BA II Plus can be quite helpful. The following is an example problem in which you can follow along with your own financial calculator. Jillyjellybeans, Inc. (JJB, Inc.) is considering an investment in a new jelly bean maker that it believes would make the jelly bean making process more efficient. The cost of the project is $15000. The cost of capital for the project is 12%. Consider 4 years, with cash inflows of 9000, 7000, 7000, 4000 in years 1,2,3, and 4, respectively. This is an independent project. Should JJB, Inc. accept or reject the machine based on the above information? Turn on your BA II+. Press CF, 2nd, and CE/C to clear any work that may be in your cash flows (CFs).
