This program is Copyright © 1976 by HewlettPackard and is used here by permission. This program was originally published in the HP67 Business Decisions Pac.
This program is supplied without representation or warranty of any kind. HewlettPackard Company and The Museum of HP Calculators therefore assume no responsibility and shall have no liability, consequential or otherwise, of any kind arising from the use of this program material or any part thereof.
Discounted Cash Flow Analysis Net Present Value 

Shift 




P? 
Label 
Inv 
i (%) 
# 
CF>NPV 
>n 
Key 
A 
B 
C 
D 
E 
Assuming a minimum desired yield (cost of capital, discount rate), this program finds the present value of the future cash flows generated by the investment and subtracts the initial investment from this amount. If the final net present value is a positive value, the investment exceeds the profit objectives assumed. If the final net present value is a negative value, then the investment is not profitable to the extent of the desired yield. If the net present value is zero, the investment meets the profit objectives.
The function associated with the C key (#) is designed to accommodate those situations where a series of the cash flows are equal. You enter the number of times these equal periodic cash flows occur with C, and then the amount only once with D. The program automatically assumes 1 for #. If the cash flow occurs only once, there is no need to enter anything for #.
Zero must be entered for all periods with no cash flow. When a cash flow other than the initial investment is an outlay (additional investment, loss, etc.) the value must be entered as a negative number with CHS
Cash flows are assumed to occur at the end of cash flow periods.
This program can also be used to find the present value of a series of irregular cash flows that cannot be accommodated by the Direct Reduction Loans program by simply entering zero as the initial investment.
An option is provided to print the initial investment and the NPV after each cash flow. Pressing f E sets and clears the print flag. Successive use of f E will alternately display 1.00 and 0.00, indicating that the print mode is on or off respectively
Step 
Instructions 
Input Data/Units 
Keys 
Output Data/Units 
1 
Load side 1. 

2 
Optional: Select print/pause mode. 

f E 
1.00 or 0.00 
3 
Key in: 




Initial investment amount 
INV 
A 
INV 

Periodic interest (discount) rate 
i (%) 
B 
i (%) 
4 
Key in the number of equal cash flows if greater than 1. 
# 
C 
# 
5 
Key in cash flow amount(s) and calculate net present value. 
CF 
D 
NPV 
6 
Optional: Display total number of cash flows entered so far. 

E 
n 
7 
For next cash flow(s) go to step 4. 



8 
For a new case go to step 2. 



An investor has an opportunity to purchase a piece of property for $70,000. If the going rate of return on this type of investment is 13.75%, and the aftertax cash flows are forecast as follows, should the investor purchase the property?
Year Cash Flow 1 $14,000 2 11,000 3 10,000 4 10,000 5 10,000 6 9,100 7 9,000 8 9,000 9 4,500 10 71,000 (property sold in 10^{th} year)
Keystrokes Outputs 70000 A 13.75 B 14000 D 57692.31 (NPV after 1 cash flow) 11000 D 49190.92 (NPV after 2 cash flows) 3 C 10000 D 31172.57 (NPV after 5 cash flows) 9100 D 26971.76 (NPV after 6 cash flows) 2 C 9000 D 20108.39 (NPV after 8 cash flows) E 8.00 (checking that we've entered 8 periods cash flows so far) 4500 D 18696.99 (NPV after 9 cash flows) 71000 D 879.93 (NPV after 10 cash flows)
Since the final NPV is positive, the investment meets the profit objectives.
The Cooper Company needs a new photocopier and is considering leasing the equipment as an alternative to buying. The endoftheyear net cash cost of each option is:
PURCHASE Year Net Cash Cost 1 $533 2 948 3 1,375 4 1,815 5 2,270  Total Net Cash Cost $6,941 LEASE Year Net Cash Cost 1 $1,310 2 1,310 3 1,310 4 1,310 5 1,310  Total Net Cash Cost $6,550
Looking at total cost, leasing appears to be less. But, purchasing costs less the first two years. Mr. Cooper knows that he can make a 15% return on every dollar he puts in the business; the sooner he can reinvest money, the sooner he earns 15%. Therefore, he decides to consider the timing of the costs, discounting the cash flows at 15% to find the present value of the alternatives. Which option should he choose?
Keystrokes Outputs PURCHASE 0 A 15 B 533 D 948 D 1375 D 1815 D 2270 D 4250.71 LEASE 0 A 5 C 1310 D 4391.32
Leasing has a present value cost of $4391.32, while purchasing has a present value cost of $4250.71. Since these are both expense items, the lowest present value is the most desirable. So, in this case, purchase is the least costly alternative.
LINE KEYS 001 *LBL A NPV>RA 002 CHS 0>R9 003 STO A 1>RC 004 0 005 STO 9 006 1 007 STO C 008 RCL A 009 CHS 010 GSB 9 011 RTN 012 *LBL B i/100>R8 013 EEX 014 2 015 ÷ 016 STO B 017 LST X 018 x 019 RTN 020 *LBL C #>RC 021 STO C 022 RTN 023 *LBL D 024 STO D 025 1 026 RCL B 027 + Calculate present value of series 028 RCL C 029 STO + 9 030 Y^{X} 031 STO E 032 RCL A 033 x 034 RCL E 035 1 036  037 RCL B 038 ÷ 039 RCL D 040 x 041 + 042 STO A 043 1 044 RCL B 045 + 046 RCL 9 047 Y^{X} 048 ÷ 049 1 050 STO C 051 roll dn Reset n to 1 052 GSB 9 053 RTN 054 *LBL E 055 RCL 9 Recall n 056 RTN 057 *LBL e Print option 058 F0? 059 GTO 1 060 SF 0 061 1 062 RTN 063 *LBL 1 064 0 065 CF 0 066 RTN 067 *LBL 9 068 F0? 069 GTO 2 070 R/S 071 RTN 072 *LBL 2 073 PRTX 074 R/S
R9 sum n A NPV B i/100 C # D CF E (1+i)^{n}
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