Net Present Value Calculation: Exam Practice - CFA® Level 1 | Test Prep

Net Present Value Calculation

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Question

What is the Net Present Value of this series of annual cash flows at an interest rate of 12% per year: Year 0: <$30,000>, Year 1: $5,000, Year 2: $8,000, Year 3:

$11,000, Year 4 <> are used to indicate a negative number).

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Explanations

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A. B. C. D. E.

B

On the BAII Plus, press CF 2nd CLRWork 30000 +/- ENTER DownArrow 5000 ENTER DownArrow DownArrow 8000 ENTER DownArrow DownArrow 11000

ENTER DownArrow DownArrow 15000 ENTER DownArrow DownArrow 2nd Quit. Then press NPV 12 ENTER DownArrow CPT. On the HP12C, press these keys: 30000 CHS BlueShift CFo 5000 BlueShift CFj 8000 BlueShift CFj 11000 BlueShift CFj 15000 BlueShift CFj. Then press 12 i, YellowShift NPV. The

"DownArrow" represents

the downward-pointing arrow on the top row of the BAII Plus keyboard. Make sure the BAII Plus has the P/Y value set to 1.