First, Press CF key and enter 3,000 followed by negative

sign as your C of 0 value and press Enter and the down arrow.

Second, enter 1000 as your first year cash inflow, press Enter and the down arrow.

Third, enter 2 for frequency and press Enter and the down arrow.

Fourth, enter 2000 as your second cash inflow, press Enter and down arrow.

Fifth, press Enter 1 for frequency, 2,

F02 and press Enter and down arrow.

Six, enter the interest rate by pressing NPV and enter 10,

not 0.10, and press Enter and the down arrow.

Seven, and finally, press compute, or the CPT key.

You will get a net present value equal to $238.17.

If you don't clear any values just yet and press the IRR key and

then the CPT key, you will get an IRR equal to 13.94%.

The last example that we will calculate is the Future Value of an Annuity

using an ordinary annuity and an annuity due.

ABC company purchased equipment providing an annual savings of

$20,000 over 10 years.

Assume the interest rate is 10%.

What is the present value of the savings using an ordinary annuity and

an annuity due?

First set your calculator to defaults by pressing the 2nd,

followed by the +/- sign and press ENTER.

Now enter 10, press N for number of periods, enter 10 and

press I/Y key to set the interest rate to 10%.

Enter payment of 20,000 followed by the negative sign.

And to solve, press CPT followed by PV.

Your answer should be $122,891.34.

Now let's calculate the same problem using an annuity due.

Press 2nd, followed by PMT, followed by 2nd, and

ENTER to change your calculator mode to beginning of period payments.

Now press 2nd and CPT key and then CPT key followed by PV key to

calculate the present value of the savings.

You will get $135,180.48.

Now you know how to solve the time value of money, future value of annuities,

net present value, internal rate of return, and ordinary and

annuity due problems using a financial calculator.