how to find npv on ti-84 plus

Daniel Parker

3 min read

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07-02-2025

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The Net Present Value (NPV) is a crucial financial metric used to evaluate the profitability of a potential investment or project. It determines the difference between the present value of cash inflows and the present value of cash outflows over a period of time. Fortunately, calculating NPV is straightforward using your TI-84 Plus calculator. This guide will walk you through the process step-by-step.

Understanding Net Present Value (NPV)

Before diving into the calculator instructions, let's briefly review the concept of NPV. NPV considers the time value of money; a dollar today is worth more than a dollar received in the future due to its potential earning capacity. A positive NPV suggests the investment is worthwhile, while a negative NPV indicates it's likely not a good investment.

Calculating NPV on your TI-84 Plus: The NPV Function

The TI-84 Plus has a built-in function to calculate NPV, simplifying the process significantly. Here's how to use it:

Step 1: Access the Finance Menu

Press the APPS button. Navigate to the "Finance" app (usually listed as "Finance"). Press ENTER.

Step 2: Select the NPV Function

Within the Finance menu, scroll down and select "NPV(". Press ENTER.

Step 3: Inputting the Necessary Data

The calculator will prompt you for the following inputs:

• I%: This represents the discount rate (or rate of return). Enter this as a percentage (e.g., 10% would be entered as 10).
• CF0: This is your initial investment (cash outflow). Enter this value as a negative number.
• CF1, CF2, CF3, ...: These represent your cash flows for each period (year, quarter, etc.). You'll need to enter the cash flows for each period sequentially. If you have more cash flows than the screen displays, continue entering values.
• F1, F2, F3, ...: This represents the frequency of each cash flow. Usually, this is 1 for each period. If you had 2 equal cash flows, you would enter 2.

Important Note: If you have unequal cash flow frequencies, you will need to repeat the cash flow value for the appropriate frequency. For example, if you have one cash flow of $100 in year 1, and then two identical cash flows of $50 in year 2, you would enter: CF1=$100, F1=1, CF2=$50, F2=2.

Step 4: Calculate the NPV

Once you have entered all the cash flows and frequencies, press ENTER to calculate the NPV. The calculator will display the calculated NPV value.

Example: Calculating NPV

Let's say you're considering an investment with:

• Initial Investment (CF0): -$10,000
• Discount Rate (I%): 12%
• Year 1 Cash Flow (CF1): $3,000
• Year 2 Cash Flow (CF2): $4,000
• Year 3 Cash Flow (CF3): $5,000

Steps:

1. Access the Finance app on your TI-84 Plus.
2. Select NPV(.
3. Input I% = 12, CF0 = -10000, CF1 = 3000, CF2 = 4000, CF3 = 5000, and F1=1, F2=1, F3=1 .
4. Press ENTER.

The calculator will display the NPV. If it's positive, the investment is potentially profitable; if negative, it's likely not a wise choice.

Troubleshooting and Tips

• Incorrect Inputs: Double-check your inputs carefully. A small error can significantly affect the NPV.
• Large Number of Cash Flows: For many cash flows, consider using a spreadsheet program for better organization.
• Understanding the Discount Rate: The discount rate is crucial and reflects the opportunity cost of capital. Choosing the appropriate rate is vital for accurate NPV calculations.

Mastering NPV calculations on your TI-84 Plus calculator empowers you to make more informed financial decisions. Remember that NPV is just one factor to consider when making investment choices. Always conduct thorough research and consider other relevant factors before making any investment.