Financial Management for Engineers Fall 2021

Calculating yield (Bond) using BA II Plus Calculator

 2nd Bond
 2nd Clr work
 6.1296 Enter - enters settlement date
  7 Enter - enters annual coupon rate
  12. 3197 Enter - enters redemption date
  100 Enter - enters face value of Bond
  360 Enter - enters no. of days in one year
  2/Y Enter - enters 2 coupon payments per year
  shows Yld = 0
  Shows Pri = 0
 98.5627 Enter - enters PV of Bond
  AI= 3.15 displays accrued interest
  toggle down until it displays yld = 0
 CPT
 The calculator displays Yld = 8.000…..

Calculating Price of a Bond using BA II calculator: see page 41 of

Handbook

 2nd Bond
 2nd Clr. Work
 6.1296 Enter - enters settlement date
  7 Enter - enters annual coupon rate
  12.3197 Enter - enters redemption date
  100 Enter - enters face value of Bond
  360 Enter - enters no. of days in one year
  2/Y Enter - enters 2 coupon payments per year
  8 Enter - enters % yield to maturity
  CPT
 Calculator displays Price as: 98.5627…..
 
 Calculator displays accrued interest as AI = 3.15

Note 360 and 2/Y can be changed by 2nd set and entering new value and press
enter

1
Calculating NPV using BA II Plus Calculator

Year 0 1 2 3 4 5 6
CF -7000 3000 4000 5000 5000 5000 5000

 CF
 2nd Clr. Work
 7000 +/- choose – Enter
  3000 Enter
 
  4000 Enter
 
  5000 Enter
 
  5000 Enter
 
  5000 Enter
 
  5000 Enter
 
 NPV
 20 Enter . 20 % is the discount rate
  CPT
 Displays NPV = 7,266.439….

 CF
 2nd clear work
 7000 +/- choose – Enter
 ↓ 3000 Enter
 ↓
 ↓4000 Enter
 ↓
 ↓5000 Enter
 ↓ 4 Enter ( enters same cf for 4 years)
 ↓
 NPV
 20 Enter ( enters 20% discount rate)
 ↓ CPT
 Displays NPV = 7,266.439…
 IRR
 CPT

2
  Displays IRR = 52.7053….

Calculating IRR using BA II Plus calculator

Year 0 1 2 3 4 5 6
CF -7000 3000 4000 5000 5000 5000 5000

 CF
 2nd Clr. Work
 7000 +/- choose – Enter
  3000 Enter
 
  4000 Enter
 
  5000 Enter
 
  5000 Enter
 
  5000 Enter
 
  5000 Enter
 
 IRR
 CPT
 Displays IRR = 52.7053….

3
Setting decimal places

See 12 of the handbook

Press 2nd format

Type 9 Enter

Sets the calculator to 9 decimal places

Instead of 9 you can type any figs from 0 to 9 to set the desired number of
decimal places

To calculate FV

Given

 PV = $100
 Interest : 8 % paid annually
 No. of years : 5
 Calculate :FV

Set the calculator as follows

Mode P/Y C/Y N I/Y PV PMT CPT FV

END 1 1 5 8 100 0 146.93

Given

 FV= $200
 Interest : 7% paid annually
 No of years : 10
 Calculate PV

Set the calculator as follows

Mode P/Y C/Y N I/Y FV PMT CPT PV

END 1 1 10 7 200 0 101.67

4
Given

 You deposit $100/ month

 Annual interest : 12 % compounded monthly
 No of years : 3
 How much money will you have at the end of 3 years?

Set the calculator as follows

Mode P/Y C/Y N I/Y PV PMT CPT FV

END 12 12 36 12 0 100 4307.69