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Cash Flow Analysis Tutorial - Financial Calculator DCF Guide

Analyze uneven cash flows and compute NPV/IRR

2nd INV HYP COMPUTE ENTER SET BGN RAD
0
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SET
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INS
 
 
 
 
 
 
xP/Y
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RAND
HYP
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COS
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ex
DATA
STAT
BOND
nPr
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Δ%
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DATE
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Analyze cash flows with our comprehensive calculator. Store uneven cash flow streams, compute NPV and IRR, and manage investment cash flow patterns.

How to Use the Cash Flow Calculator

  1. Access CF Worksheet: Press CF to enter the cash flow worksheet
  2. Enter Initial Flow (CF0): Input initial investment (negative for outflows)
  3. Add Cash Flows: Enter C01, C02, etc. for each period's cash flow
  4. Set Frequencies: Use F01, F02 to repeat identical cash flows
  5. Calculate NPV/IRR: Access NPV or IRR functions to analyze

Navigation Tips

  • Move Between Flows: Use ↓ and ↑ arrows
  • Review All Flows: Press CF repeatedly to cycle through
  • Clear Worksheet: Press CF, then 2ND CLR WORK

Understanding Cash Flow Analysis

The Cash Flow (CF) worksheet is a powerful tool for analyzing investments with uneven cash flow patterns. Unlike the TVM calculator which handles regular payments, the CF worksheet manages irregular cash flows common in real-world investments.

What You Can Do

  • Store uneven cash flow streams
  • Analyze investment cash flow patterns
  • Compute Net Present Value (NPV)
  • Compute Internal Rate of Return (IRR)
  • Manage up to 32 different cash flow groups

Sign Convention

Critical: Always use negative (-) for outflows and positive (+) for inflows. This ensures correct NPV and IRR calculations.

Managing Cash Flows

Inserting a Cash Flow:

  1. Navigate to where you want to insert (e.g., C02)
  2. Press 2ND INS
  3. Enter the new value and press ENTER

Note: All subsequent cash flows are renumbered automatically.

Deleting a Cash Flow:

  1. Navigate to the cash flow to delete
  2. Press 2ND DEL

Note: The cash flow and its frequency are deleted, and subsequent flows are renumbered.

Formula & Variables

NPV = Σ[CFt / (1+r)^t]
IRR: Σ[CFt / (1+IRR)^t] = 0
  • CF0: Initial cash flow (usually negative investment)
  • C01-C32: Cash flows for periods 1-32
  • F01-F32: Frequency (repetitions) of each cash flow
  • I: Discount rate for NPV calculation

Example Calculations

Complete Cash Flow Analysis: Machine Investment

Learn the complete workflow: Enter cash flows, calculate NPV, and find IRR for a $7,000 machine investment.
Expected cash flows - Year 1: $3,000 | Years 2-5: $5,000 each | Year 6: $4,000

Part 1: Cash Flow Entry

Step Input Display Description
1 CF CF0= 0.00 Access Cash Flow worksheet
2 7000 +/- ENTER CF0= -7,000.00 Enter initial investment (negative = outflow)
3 ↓ C01= 0.00 Move to first cash flow
4 3000 ENTER C01= 3,000.00 Year 1 cash inflow
5 ↓ F01= 1.00 Frequency (occurs once)
6 ↓ C02= 0.00 Move to second cash flow
7 5000 ENTER C02= 5,000.00 Years 2-5 cash inflow
8 ↓ F02= 1.00 Move to frequency
9 4 ENTER F02= 4.00 Occurs 4 times (years 2-5)
10 ↓ C03= 0.00 Move to third cash flow
11 4000 ENTER C03= 4,000.00 Year 6 cash inflow
Cash Flow Timeline:
  • CF0: -$7,000 (now)
  • Year 1: +$3,000
  • Years 2-5: +$5,000 each
  • Year 6: +$4,000

Part 2: NPV Calculation

Computing NPV: With cash flows entered, calculate NPV at 20% required return:

Step Input Display Description
12 NPV I= 0.00 Access discount rate variable
13 20 ENTER I= 20.00 Enter 20% required return
14 ↓ NPV= 0.00 Move to NPV calculation
15 CPT NPV= 7,625.99 Calculate net present value

Part 3: IRR Calculation

Finally, find the internal rate of return:

Step Input Display Description
16 IRR IRR= 0.00 Access IRR calculation
17 CPT IRR= 55.63 Calculate internal rate of return
Complete Analysis Results:
  • NPV @ 20%: $7,625.99 (positive = profitable)
  • IRR: 55.63% (exceeds 20% hurdle rate)
  • Total Cash Return: $27,000
  • Net Cash: $20,000 profit
  • Decision: Strong accept - investment adds significant value
Cash Flow Entry Tips
  • Frequency Saves Time: Set Fnn > 1 for consecutive equal cash flows
  • Navigation: Use ↓ and ↑ arrows to move between cash flows
  • Clear Worksheet: Press CF, then 2ND CLR WORK to reset all cash flows
  • Insert/Delete: Use 2ND INS or 2ND DEL when "INS" or "DEL" appears
  • Review: Press CF repeatedly to cycle through all entered cash flows

Frequently Asked Questions

The CF worksheet analyzes investments with irregular cash flows, unlike TVM which handles regular payments. It's ideal for real estate, business projects, and any investment with varying cash flows over time.

Use the frequency feature. Instead of entering the same amount multiple times, enter it once and set the frequency. For example, if you receive $5,000 for 4 years, enter C01=5000 and F01=4.

TVM handles regular, equal payments (like mortgages). CF handles irregular cash flows (like business investments). Use TVM for loans and annuities, CF for project analysis and investments with varying returns.

Yes, navigate to any cash flow and type a new value. Use 2ND INS to insert new flows or 2ND DEL to delete existing ones. The calculator automatically renumbers subsequent flows.

Proper signs ensure accurate NPV and IRR calculations. Always use negative for money going out (investments, expenses) and positive for money coming in (returns, revenues). Incorrect signs will give wrong results.

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Disclaimer

This Financial Calculator is an independent, third-party tool provided by ryanoconnellfinance.com. It is not affiliated with, endorsed by, or connected in any way to Texas Instruments Incorporated or any of its products. All trademarks, including "BA II Plus," are the property of their respective owners. This tool is provided for educational and informational purposes only and should not be used for official examinations where specific hardware calculators are required. The accuracy of calculations is not guaranteed; verify all results.

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