how can I do this question on a TI83? . If the interest rate is 10% and cash flows are $1,000 at the end of year one and $2,000 at the end of year two, then the present value of these cash flows is
To calculate the present value of these cash flows on a TI-83 calculator, you can use the Time Value of Money (TVM) functions. Here's how:
1. Press the "APPS" button on your TI-83 calculator.
2. Scroll down and select the "Finance" application by pressing the corresponding number button or navigating to it using the arrow keys and then pressing "ENTER".
3. Once in the "Finance" application, select the "TV" option for the Time Value of Money calculations.
4. You will see six variables: N, I/Y, PV, PMT, FV, and CPT. We will use only a few of these for this calculation.
- N represents the number of periods. In this case, there are two periods (year one and year two).
- I/Y represents the interest rate per period. In this case, it is 10% or 0.10 in decimal form.
- PV represents the present value, which is what we want to calculate.
- FV represents the future value, which is the cash flow at the end of year two.
5. Input the values into the corresponding variables. Enter 2 for N, 0.10 for I/Y, 0 for PMT (as there are no regular payments), and 2000 for FV.
6. To calculate the present value (PV), press the "CPT" button and then the "PV" button. The calculator will display the present value of the cash flows.
In this case, the present value of the cash flows is $1,652.89.