Advanced Calculator Functions using the TI BA11 Plus Calculator for the CFA® Exam

During a CFA® Exam, speed and accuracy matter, and candidates should invest their time learning how to use the TI BA11 Plus Calculator more effectively to employ its capability. This calculator is the ultimate choice for candidates sitting for CFA financial test, and candidates should know time-saving TI BA11 Plus functions for their exam preparations.

The T1 BA11 Plus Calculator is designed specifically for business professionals and students to use in the financial calculation. Besides, the easy-to-use financial calculator delivers efficient computation functions and memory.

This article will explore the functionality of the Texas Instrument BA11 Plus Calculator associated with capital budgeting. Candidates can use the cash flow keys of the calculator for uneven cash flow calculations of either present or future value. Other functionalities of the calculator include calculating statistical functions including mean, variance, covariance, standard deviation, regression, and correlation.

Capital Budgeting

Capital budgeting allows an individual to determine cash flows for a particular investment for a specific number of years in the future and determine if the investment is worthwhile. In the TI BA11 Plus calculator, the buttons used to initiate the capital budgeting functionality of the calculator are the CF, NPV, and IRR buttons standing for cash flows, net present value, and internal rate of return, respectively.

For example, a $20,000 investment that will accrue a return of $10,000 in cash flows the first year, $8,000 the second year, and $6,000 each in the next two years. You will start by pushing the CF button and typing $20,000 as the initial investment. Since the 20,000 is what you will pay out, it should be negative. Next, hit the enter button and then the down arrow.

This means an individual is ready to start entering future cash flows from the potential project. Hence, the calculator will prompt one with the notation “CO₁” for the first cash flow. You will type 10,000 and press enter and then the down arrow. The calculator will proceed by giving you the prompt “FO₁” for frequency, granting you the chance to enter how many times in a row the cash flow occurs.

In this example, the cash flow occurs when you hit the down arrow again to key in the subsequent cash flow. It would help if you did this for all years, acknowledging that you should change the frequency to 2 for the last 8,000. After entering all the cash flows, you can calculate the net present value of the project and the internal rate of return by hitting the NPV and IRR buttons, respectively.

Other calculations include the payback period and discounted payback period. The payback period and discounted payback period measure liquidity and how long it takes to obtain the initial investment. To calculate this, you repeat the process of keying in cash flows up to the point of calculating the NPV. Secondly, you will enter the discount rate, find the NPV and get the net future value (NFV) to get the payback period.

Additionally, you can calculate the Breakeven Quantity of Sales (QBS). The QBS indicate the number of units a person needs to cover fixed cost. In the calculator, the QBS mode is attained by hitting the second key and then 6. It would be best to clear all the entries, put in your fixed costs, and press enter. Next, key in your variable cost per unit and scroll down to get the profit. Scroll down to quantity and compute to get the units.

Uneven Cash Flow

The TI BA11 plus Calculator can also calculate uneven cash flows. It has the “CF” key to handle a series of uneven cash flows. For instance, you have cash flows that go for five years and in the first year, the cash flows series are 100,000, 200,000, 300,000, 400,000, and 500,000. How can you calculate the investment when the rate of return is 12%?

The calculator will prompt you to enter each cash flow along with the frequencies that it occurs. First, use the “CF” button to enter the cash flows exactly in their sequence by pressing the CF, 2nd, and CE/C buttons. Next, press CF to enter the cash flows, then press enter and down arrow and repeat the process.

You can press the NPV and type 12 and enter button and then the press down arrow. To get the present value, press CPT. for the future value of uneven cash flows; you have to clear the financial keys by pressing the 2^nd and FV button and entering the present values obtained into the PV key where N will be five I/Y will be 12. Proceed to press CPT FV to obtain the future value.

Statistical Function: Covariance, Correlation, and Regression

You can calculate the mean, variance, and standard deviation with the TI BA11 Plus calculator by using the 2^nd 7 (Data) to enter the values and omitting Y and then the 2^nd 8 (Stat) to calculate the statistic. When you press 2^nd, then calculate must display 1-V, and if not, press 2^nd Enter to toggle through it. Besides, the covariance and correlation are entered by pressing 2^nd 7 and entering the data for X and Y. Then, you press 2^nd 8 and choose LIN by keying 2^nd Enter as required. After that, press the down arrow to find r, S_x, and S_y, and determine their products.

Depreciation

First, you have to clear entries by pressing 2^nd, Clear Entry, and then Enter. Secondly, press the 2^nd Depr keys to access the depreciation worksheet. Choose a depreciation method by pressing 2^nd SET repeatedly to gain the desired method. Proceed by pressing the arrow down and arrow up to move through each set of variables.

The steps followed involve pressing 2^nd Depr 2^nd CLR Work to attain sets LIF=1, M01=1, YR=1, CST=0, SAL=0. The next step is pressing 2^nd Reset ENTER to set the depreciation method to SL. Additionally, computed RBV, RDV, and DEB are annual, resulting in rounding off the number to the nearest decimal place.

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