Texas Instruments BAIl PLUS Tutorial
To begin,look at the face of the calculator. Almost every key on the BAIl PLUS has two functions: each key's primary function is noted on the key itself, while each key's secondary function is noted in white above the key. To use the function on the key, simplypress the key. To access the white functionabove each key, firstpress the gray key with "2nd" printed on it, which we will call the "2nd shift"key, and then press the desiredfunction key. (Note that the 2nd shift key is near the upper left comer of the calculator keyboard.)
Turning the Calculator On and Off To turn on the calculator, press ION/OFF To turn off the calculator, press ION/OFFI. I. Note that the "ON/OFF" key is on the upper right comer of the keyboard. Also, we will designate keys throughout this tutorial by the use of small boxes, as above. To conserve the battery, the calculator turns itself off about 10 minutes after your last keystroke. Also, note that pressing the 2nd shift key places a little "2nd" symbol in the upper left comer of the display. Press the 2nd shiftkey again and the symbolgoes away. The key is a toggle key that
~
switchesback and forth between the "regular" and the "2nd" functions. shift key. After you press B,
~
is like the typewriter
look only at the white writing above the keys.
Note that the calculator has a continuous memory, so turning it off does not affect any data stored in the calculator, but it will erase any number showing on the scr~n.
Qearing the Calculator Five of the most commonly used methods of clearing data are presented below:
~ ~
~
I
1 MEM
1~
I
CLR WORK
1
1
clears all I0 memory locations and the display.
1 QUIT I~
I CLR TVM clears the TVM worksheet.
1 CLR WORK .1clears worksheets other than the TVM worksheet.
CFJC
1
clearsthe entiredisplay,but not the memory.
G
clears numbers on the display one at a time if you made a mistake entering data.
Review your owner's manual for other methods of clearing information.
Copyright @ 1999 by Harcourt Brace & Company
Texas Instruments BAIlPLUS Tutorial Page 2
Clearing the calculator is very important. It is best to get into the habit of automatically clearing memory before starting a calculation. since unwanted data in memory can result in improper calculations. The calculator comes preset at 12 periodsper year. it assumes calculations will be done on a monthly basis. To change from 4 places to 2. However. press
~ ~ ~
I QUIT
I.
Copyright @ 1999 by Harcourt Brace & Company
.we often use 4 placeswilendealingwith interest rates and rates of return that are entered as decimals. that is. so starting with a clear memory is the safest approach. Occasionally. but.
Time Value of Money (TVM) The TVM keys are located on the third row from the top of the keyboard.press PlY .
0.
Periods per Year Setting
thY The displayshowsthe the periods per year setting. press B
1 FORMAT
101
ENTER
IB
I QUIT
I. we generallyleave the calculator setting at 1 period per year.
We usuallyset the displayto 2 places.which is especiallyconvenient when working with dollars and percentages.
Unlessneededfor other work.
Changing the Display
To change decimals from 2 to 4. To confirm this setting. To change to 1/year: PressB~ 11 ENTER I~I QUIT I.00 is displayed. However.you may purposely want to save data. To check the current One important setting.
~ig
Now the calculator is set to assume 1 period/year. in general. TVM problems involve four variablesthree are known and the fourth is unknown. can cause problems is settingfor periods/year. and hence wrong answers.0000
is
displayed. press
B
1
FORMAT
101
ENTER 1B
1 QUIT 1
0.
0~~1
PMT
I~
In general. you will be entering all new data. finance textbook problems generally use 1 period/year.
If you know any three variables.Texas Instruments BAIlPLUS Tutorial Page 3
Lump Sums
To PMT key. enter the data.
~
~
30
26 EJ 100 ~
0 I PMTI (Optional if registers are cleared. you can find the value of the fourth. the this situation.
Copyright @ 1999 by Harcourt Brace & Company
Pressingthe
~ ~
. because the BAlI PLUS assumes that one is an inflow and the other is an outflow.04 is displayed.)
1
To determine the FV simplypress
CPT
I~
and the FV of $200.46 will grow to $500 in 5 years at a 10 percent rate. Example 1: What is the FV of $100 after 3 years if the interest rate is 26 percent? First. one must be entered as negative and the other as positive. single which sets In payment (PMT) do not use the begin. Example 2: What is the PV of $500 due in 5 yearsif the interest rate is 10 percent? Clear first and then enter the following data. Next.and vice versa. When entering both PV and FV. we equal to 0. so be sure to either press wijh CLR (lrmP) sums. we consider TVM calculations TVM or enter 0 as the PMT when entering the input data. clear with 1 CLR TVM I.
50
10 EJ
0 1 PMT I (Optional if registers are cleared.)
500
~
key reveals that $310.
The BAlI PLUS is programmed so that if the PV is + then the FV is displayed as .
)
PMT
~
~
key and the BAIl PLUS calculates the rate of return to be 12. Now suppose you learn that the bond will actually cost $300. though.
What was on the screen
Copyright @ 1999 by Harcourt Brace & Company
.000 after 14 years. It willreturn $1.
Override the 200 by entering 300 then press
I

0 B
CPT.00. What rate of return will you earn? I~ to get 8.
Simplypress the §]
Rememberthat the BAll PLUS is programmedso that if the PV is + then the FV is displayed as and vice versa because the BAIl PLUS assumes that one is an inflow and the other is an outflow.98 percent. The important thing. The bond pays no interest during its life. If you pay more for the bond. to Is the 14. l The diSPjy I
0 0.Texas Instruments BAIlPLUS Tutorial Page 4
Example 3: Assumea bond can be purchasedtoday for $200.18%.
Now do nothing except press ION/OFF to turn off the calculator. you earn less on it.get N =memory erased? Not completely. is that you can do "what if' analyseswith the calculator. Then turn on the calculator I
I
isONIOFF but press RCL gone. What rate of return would you earn if you bought the bond? 14 200 0 1000
0 0~
I
(The
I
0
key changes the sign.
~
In ~ ~ essence.leach layment isappearson the screenandTothe upper right comer . Now the BAll PLUS ana1~ the cash flows~ based.71 is displayed. but enter 0 as the FV to override. "BGN' shifted back one period. in analyze annuities due
CFJC
of the display.
What is the PV of the same annuity? Leave data in calculator.24.on betnning of period payments.
Copyright @ 1999 by Harcourt Brace & Company
. then press Annuities Due Each payment of an annuity due occurs at the beginning of the period instead of at the end as with a regular aruityj press BON
~ ~
to get $421. Changebackto end modeby pressing~ I BON I~ CFJC .Texas Instruments BAIl PLUS Tutorial Page 5
Ordinary Annuities Example 1:
What is the FV of an annuity of $100 paid at the end of each year for 5 years if the interest rate equals 6 percent?
0
I
1 6%
~
100
2 + 100
3 + 100
4 + 100
5
~
100
50
6 ~ 0 ~ 100 01
Now press the Example 2:
PMT
I
~ ~
key. and an FV of$563.
EAR
Given: kNom=
= [I
+
k~~r
.I = (1.
Assume the following cash flows:
0
I
1 10%
~
2
+
3 150
0 What is the PV of these CFs?
50
100
i
4 1 200
First clear the BAll PLUS and make sure that periods/year is set equal to 1.Texas Instruments BAIlPLUS Tutorial Page 6
Interest Conversion The following equation is used to convert a nominal rate to an effective rate. and IRR (internal rate of return) of a series of unequal cash flows.
10% and m = 12 payments/year. First. Cash Flow Operations Example 1: Uneven Cash Flaws We can also find the PV.
However.0083)12.I = I.I.I =
0. we need to set the calculator to 12 payments per year:
01
0@]
ICONV
IITJ121 ENTER I
I
0101 ENTER
The effective rate of 10.I 047 .47"10. FV. it's much easier to convert the nominal rate using the calculator.1047
= 10.
EAR
= [I
+
°i~O
r .
Copyright <9 1999 by Harcourt Brace & Company
.47 percent is displayed on the screen.
Example 2: Embedded Annuities We have these cash flows. Next. the number of periods. press
~
to get PV = NPV = $377. enter the cash flows: 0
50
I
~
then clear any previous cash flow analyses. To
find the PV.
Copyright @ 1999 by Harcourt Brace & Company
.
1 100 1 150 1 200 1
I
ENTER ENTER ENTER ENTER ENTER ENTER ENTER
I
I
I
I
10 10 10 10
10
I
I
I
The CFs from the time line are entered.40. set P/YR = 1 if changed. which contain embedded annuities: 0
I
1 10% ~ 100
0 What's the PV?
2 + 100
3 4 + + 100 200
5
200
t
6 + 300
7 + 300
8
9
~
300
t
300
Clear.
~
ENTER
ENTER
I
10 10
10
Sets CFo equal to 0 and moves to CF 1.
Sets CF1 equal to 50 and moves to frequency of occurrence of CF1.
I
NPV1101 ENTER 10
At this point the BAlI PLUS knows the cash flows. Now enter the interest rate.Texas Instruments BAIlPLUS Tutorial Page 7
Enter the cash flow worksheet by pressing I CLR WORK I. Tells calculator that the $50 CF occurs only once. and the interest rate.
Texas Instruments BAIlPLUS Tutorial Page 8
First enter the cash flow worksheet by pressing @] then clear any previouscash flow analyses.099.
Now the BAIl PLUS knows the cash flows.
~
I CIA WORK
0 100 3 200 2 300
4
I
I.
Next.
~
To check your entries:
@]
then use the up and down arrow keys to view each cash flow. To find the PV.94. enter the interest rate:
I
NPV
110 1 ENTER 10. press to get PV = NPV = $1. and the interest rate.
At this point the BAIl PLUS knows the cash flows. Thus. the number of periods.
Copyright @ 1999 by Harcourt Brace & Company
. enterthe cashflows:
ENTER
10
Sets CFoequal to 0 and moves to CFl'
I ENTER0 1 I ENTER0 1 I ENTER0 1 I ENTER0 1 1 ENTER0 1
I ENTER 1
SetsCF1 equalto 100andmovesto ftequencyof occurrenceof CFl'
Tells calculator that the $100 CF occurs three consecutive times.
The calculator displays the mR closest to zero. When you are solving very complex cash flow problems. the calculator displays Error 7 (iteration limit exceeded). the displayed solution has no financial meaning. even if a solution exists. simplypress~1
CPTIand the IRRof16.000 and moves to CF l' Sets CF1 equal to 1000 and moves to fTequency of occurrence of CFl' The second $300 CF occurs only once. Here is the CF time line:
0
I
1
I
2
I
3
I
4
I
1000 What rate of return will we earn?
300
400
200
600
~
First enter the cash flow worksheet by pressing I CLR WORK I. Thus.
01
I ENTER
ENTER
10 100 100 100 100
Sets CF0 equal to 1. you should use caution in making investment decisions based on an IRR computed for a cash flow stream with more than one sign change.71
percentis displayed. or if a sequence of cash flows has two or more sign changes.
Copyright @ 1999 by Harcourt Brace & Company
. at there may be multiple mR solutions. However. Next. the calculator may not be able to find IRR. When this is the case.Texas Instruments BAIl LUSTutorial P Page 9 Example 3: The Rate of Return Offered by an Investment (IRRY Assume that we invest $1. enter the cash flows: 1000 300
~
then clear any previous cash flow analyses. 2Ifyou do not enter a value for frequency after you enter the cash flow value. Thus. the down arrow key must be pressed again before entering the next cash flow.000 now (t = 0) and then expect to receive an uneven set of cash flows.
Iffa negative CF OCCW"Sthe end of a project's life.2
0
tells calculator that the
400 200 600
I
ENTER
I ENTER I ENTER
Now the BAIl PLUS knows the cash flows. the calculator assumes a value of I ~ however.
50 is displayed.Texas Instruments BAIlPLUS Tutorial Page 10
You can also determine the NPV of the investment. Thus. This enters 95 as the second data entry and tells the calculator there is no Yvariable associated with the X variable. the PV of the cash inflows exceeds the cost of the investment by $220. This enters 260 as the third data entry and tells the calculator there is no Yvariable associated with the X variable. Keep pressing then until "IV' (one variablecalculationmethod) is displayed. ~ I CLR WORK I. Mean and Standard Deviation (a)
fiar
1994 1995 1996
~
$150 95 260
What's the mean (average) and standard deviation (a) of sales over the 3 years? First selectthe dataen~rtion of the statisticsworksheet by pressing ~ previous data entries. To find NPV press
I
IIYR ENTER 181 IQJ~
The NPV of $220. Leave data entered and then enter the opportunity cost interest rate. Next.50.
I
ENTER
I
ENTER
Now selectthe statisticalcalculationportion of the statisticsworksheet by pressing ~ clear any previous statistical entries. Statistical Calculations The BAIl PLUS can also be used for several types of statistical calculations. say 8 percent. enter the data: 150 95 260
I
I DATA then clear any
I
ENTER
IQJQJ
IQJ QJ
IQJ QJ
This enters 150as the data entry and tells the calculator there is no Yvariable associated with the X variable.
I STAT then
I
"LIN" should now be displayed on the screen. ~ I CLR WORK I. Press the down arrow key three times to view (1) sample
~
~
Copyright @ 1999 by Harcourt Brace & Company
.
and (3) standard deviation.2
24.8 38.7 12.6 as the first Y variable.
I ENTER
1
ENTER
10 10
ENTER
ENTER
This enters 23.6 Stock (Ie.
7. Year 1 2 3 4 5 Market (kuJ 23.8% 7.7 6.6 as the fifth X variable.2 40. This enters 8.3 as the third Y variable. where the X data is on the horizontal axis (market) and Y data is on the vertical axis (stock).2 6.6% 24. This enters 12. This enters 30.33.3 20.5 30. ~ Next. This enters 6. enter the data as follows: 23.01.6
I DATAlthen
clear any
I CLR WORK
I.2 30.5 8. This enters 24.6 20.1
01 01
1
10 10
This enters 7. n.) 38. The X (independent variable) and Y (dependent variable) values must be entered in the proper sequence.2 as the second X variable.3 8. (2) mean. Sx. X. This enters 20. The mean equals $168. This enters 40.Texas Instruments BAIlPLUS Tutorial Page 11
size.1
First selectthe dataentryportion of the statisticsworksheet by pressing ~ previous statistical entries. The standard deviation is $84.5 as the fourth X variable.6 as the third X variable.2 as the fourth Y variable. Linear Regression Beta coefficients can be calculated by using the BAIl PLUS's linear regression capabilities.1 as the fifth Y variable. This enters 38.6 12.8 as the first X variable.7 as the second Y variable.
ENTER ENTER ENTER ENTER ENTER ENTER
1
I
I
I
1
10 10 10 10 10 10
Copyright @ 1999 by Harcourt Brace & Company
.6 40.
the slope value is 1. (The intercept value is 8.
Copyright @ 1999 by Harcourt Brace & Company
. "r =" appears on the screen.
1 STAT then
1
"LIN" shouldnow be displayedon the screen. Now perform the following steps: 3 10 1000
(~~
~
1QUIT b
0 ~ ~
~IPMTI
A payment qf 402. Keep pressing [2] until "a =" appears on the screen. by pressing ~ Example: Detenninethe interestand principalpaid eachyear and the balance at the end of each year on a threeyear $1.
The BAIl PLUS can also be used to calculateamortization schedules.91.000 amortizing loan which carries an interest rate of 10 percent. First. This is the value of the slope of the regression line. First.) Clear the calculator by pressing ~
Amortization
I DATA
I~
1 CLRWORK I. This is the value of the yinterceptof the regressionline. and the correlation coefficient is 0.Texas Instruments BAIl LUSTutorial P Page 12
Now selectthe statisticalcalculationportion of the statisticsworksheet by pressing ~ clear any previous statistical entries. If you press [2] one more time. Press [2] one more time and "b =" appears one the screen.92.11 is displayed. ~ I CLR WORK I. check payments/year and be sure it's 1. The payments are due annually. This is the value of the correlation coefficient of the regression line. clear the TVM registers I QUIT I~ I CLR TVM I.60.
To viewthe results for the secondpayment.79 36.89 365.
ENTER
Now just use the down arrow key to view the balance after the payment as well as the interest and principal portions of the first payment.89 365. Repmt. Ending period set at 1 because we want to view the amortizationinfonnation for each and every payment.11 402.11 332.'' press and use the down aITOW to viewthe ending balance after the payment is made as well as the interest and principal key portions of the second payment. This is the amortization schedule corresponding to the loan. 697.57 Pyment 402.56 Prine.press to moveto ''PI.02
0
~
Copyright @ 1999 by Harcourt Brace & Company
.55 Ending Bal.00 697.000.Texas
Instruments
BAIl PLUS Tutorial
Page 13
Now we will use the amortization worksheet to generate an amortization schedule for the loan:
~I
0 II
AMORT
I~I
I
CLRWORK
I
Enters the Amort worksheet and clears any old contents.00 69. Bal. Repeat for the third and last payment. 1 2 3 Beg.11 402.32 365.11 Interest 100. 1. 302.57 .