NeoCal Documentation

NeoCal for Palm OS User Guide

Cash Flow Analysis

This application uses the and registers. In addition, the user registers are used to store the cash flow entries. The net present value () function uses the register to calculate the present value of a series of cash flows and stores the result in the register. The internal rate of return () function calculates the annual nominal interest rate required to give a net present value of zero and stores the result in the register.

All cash flows must occur at regular intervals, but can be of differing amounts. Each cash flow entry consists of an amount and the number of times it occurs consecutively. Up to 99 cash flow entries can be stored after the initial cash flow. The amount of the initial cash flow is stored in register 0, the amount of the first cash flow is stored in register 1, the amount of the second cash flow is stored in register 2, and so on. When you enter a series of cash flows, you must account for every period, even those with a zero amount.

To enter the cash flows,

  1. Press to clear the financial registers and any cash flow entries.
  2. Enter the number of periods per year in the register, if necessary.
  3. Enter the initial cash flow amount and press .
  4. Enter the next cash flow amount and press .
  5. If this cash flow entry occurs more than once consecutively, enter the number of times it occurs and press .
  6. Repeat steps 4 and 5 until all the cash flow entries have been entered.

To review all of the cash flow entries,

  1. Press (or if the 100 Registers option is enabled in the Preferences dialog) to display the initial cash flow amount.
  2. Press to display the amount of the next cash flow entry.
  3. Press to view the number of times that cash flow amount occurs.
  4. Repeat steps 2 and 3 until all the cash flow entries have been reviewed.

The Cash Flow dialog can also be used to review the cash flow entries. Use the Preferences dialog to assign a section of the display for quicker access to this dialog.

To review and edit the cash flow entries,

  • Press followed by the number of the cash flow entry to display that amount.
  • Press followed by the number of the cash flow entry to store that amount.
  • Pressing displays the next cash flow amount.
  • Pressing stores the next cash flow amount, but does not change the number of times the cash flow occurs.
  • Pressing displays the number of times the current cash flow occurs. The current cash flow entry is the entry whose amount was last stored or recalled.
  • Pressing stores the number of times the current cash flow occurs.
  • The cash flow amount can be changed by storing a new amount into the corresponding register, provided that the amount was initially stored using the button.
  • To add a new cash flow entry, first recall the last cash flow amount, then enter the new cash flow amount using the button.

Let's suppose that you purchase $1000 worth of stock at the beginning of each of the next 12 months and then sell the stock two years from now for $16,000. What is the annual internal rate of return?

  1. Press to clear the registers.
  2. Press to store the number of periods per year.
  3. Press to store the initial cash flow.
  4. Press to store the first cash flow entry.
  5. Press to store the number of occurrences for this cash flow.
  6. Press to store the second cash flow entry.
  7. Press to store the number of occurrences for this cash flow.
  8. Press to store the last cash flow amount.
  9. Press to calculate the annual internal rate of return (18.71 percent) and store it in the register.

As another example, let's calculate the present value of twelve monthly payments of $1000 assuming 8 percent nominal annual interest rate and the first payment starting in one month from now:

  1. Press to clear the registers.
  2. Press to store the number of periods per year.
  3. Press to store the interest rate.
  4. Press to store the initial cash flow.
  5. Press to store the amount of the initial cash flow entry.
  6. Press to store the number of occurrences.
  7. Press to calculate the net present value (11,495.78) and store the result in the register.