1

Purpose and objective

2 PURPOSE AND OBJECTIVE

The purpose and objective of this session are to introduce you to your HP10BII
or HP10BII+ calculator.
Please note that you will work in detail through relevant examples during the
specific topics to make sure that you can properly use your calculator.
3 CONTENT M ATERIAL
Resources:
Please work through the following documents:
3.1 Calculator diagram
3.2 Getting started guide.
(Please work through the basic functions, TVM, Amortization and cash flow
section and examples of your own calculator’s manual. The HP10bII+ user
manual and quick start guide can also be downloaded from HP’s website. You
can follow the link below:
https://support.hp.com/us-en/product/hp-10bii-financial-calculator/5034296/manuals)
4 CONTENT MATERIAL

USE OF HP 10B11+ CALCULATOR IN EACC3708 AND EFIN2708

The financial calculator will mainly be used to solve Time Value of Money
(TVM) and cash flow (CFLO) problems.
Certain ground rules have to be followed in solving TVM problems:
´ Cash flows – Cash outflows are negative and cash inflows are positive.
´ Periods – The timeline for a TVM problem is divided into equal time
intervals. (Please note that N represents the number of periods and not
the number of years.)
´ Payments are made either at the beginning or the end of a period.
´ When equal payments are made (TVM problems) the term payment
(PMT) is used. When unequal payments are made (CFLO problems), the
Cfj function is used.
5 CONTENT MATERIAL

Let’s get started and look at some basic functions:

Power On and Off:

To turn on your HP 10bII+, press .

To turn the calculator off, press the orange shift key, .

Clear memory:
To clear all the memory on your calculator press the following:

(It is very important to clear your calculator before you start working to
ensure that there is no other information saved/stored that can influence
the calculated answer. Nothing else should be displayed on the screen
other than 0.00 (depending on the number of digits your calculator is set
on).
6 CONTENT MATERIAL

TVM calculations:
See below a table with the basic keys used in TVM calculations:
7 CONTENT MATERIAL

Make sure the following settings are correct:

P/YR:
Number of periods per year, for example, if they are referring to annual
payments, then the payment per year should be set at one. If they are
referring to monthly payments, then P/YR is set at 12, etc. You can view the
currently P/YR setting by pressing the following:

To change the P/YR to 12 payments per year, you should press for example
the following: number of periods, e.g. .

Beg/End:
If payments are made at the beginning of the period, your calculator’s screen
should indicate BEG. You can change the beginning or end mode by
pressing .

If the payments are made at the end of the period, then nothing should be
displayed on the screen of the calculator.
8 EXAMPLES

Let’s work through a TVM example together:

If you borrow R14 000 today (at the beginning of period 1), how much will
you pay back over 30 years at 10% p.a. if the interest is compounded
annually?

Test yourself!
9 EXAMPLES

Question:
If you borrow R14 000 today (at the beginning of period 1), how much will
you pay back over 30 years at 10% p.a. if the interest is compounded
annually?
Calculation and answer:

P/YR = 1
PV = 14 000
N = 30
i = 10%
FV = ?

ANSWER:
FV = - R244 291,63
10 CONTENT MATERIAL

Cash flow calculations:

See below a table with the basic keys used in cash flow calculations:
11 CONTENT MATERIAL

Table with basic keys used in cash flow calculations continue:

12 EXAMPLES

Let’s work though a cash flow example together:

CFLO problem: When the

payments are not the same for
every period.

If you have an initial cash outflow of R40 000, followed by monthly cash
inflows of R4 700, R7 000, R7 000, and R23 000, what is the NPV if the
discount rate is 10%?

Test yourself!
13 EXAMPLES
Question:

If you have an initial cash outflow of R40 000, followed by monthly cash
inflows of R4 700, R7 000, R7 000, and R23 000, what is the NPV if the
discount rate is 10%?

Calculation and answer:

P/YR = 12
NB! Please note: Cash outflow is
CFj 0 = - 40 000 negative and inflows are positive.
IF there were both outflows and
CFj 1 = 4 700 inflows for the same period, you
will work with the net amount.
CFj 2 = 7 000
CFj 3 = 7 000
CFj 4 = 23 000
i = 10 %
NPV =?
Answer: NPV = 622,85
14 HOMEWORK

Complete the multiple-choice quiz available on Blackboard under

assessments.

Please note that this quiz will NOT contribute to your predicate. You have
unlimited attempts with no time limit and the quiz will remain open for the
remainder of the year. The main purpose of the quiz is to help you practice
and get confidence in using your calculator.

Thank you!