Net Present Value Calculation | CFA® Level 1 Exam Prep

Net Present Value of Annual Cash Flows | CFA® Level 1 Exam

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Question

What is the Net Present Value of this series of annual cash flows at an interest rate of 14% per year: Year 0: <$4,000>, Year 1: $2,000, Year 2: $0, Year 3: $0,

Year 4 to indicate a negative number).

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Explanations

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C

On the BAII Plus, press CF 2nd CLRWork 4000 +/- ENTER DownArrow 2000 ENTER DownArrow DownArrow 0 ENTER DownArrow DownArrow 0 ENTER

DownArrow DownArrow 4000 ENTER DownArrow DownArrow 2nd Quit. Then press NPV 14 ENTER DownArrow CPT. On the HP12C, press these keys: 4000

CHS BlueShift CFo 2000 BlueShift CFj 0 BlueShift CFj 0 BlueShift CFj 4000 BlueShift CFj. Then press 14 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.