HP-12C NPV Cash Flow

HP-12C NPV (VPL) cash flow

Net Present Value (NPV) brings every cash flow back to time 0: NPV = Σ CF_t / (1+r)^t. The HP-12C keystrokes are straightforward. You enter the discount rate with [i], then CFo (usually the negative initial outlay) followed by each CFj, and finish with [f] [NPV]. A positive NPV means take the project; a negative one means walk away.

Here the discount rate (cost of capital or WACC) is something you feed in, whereas IRR works the other way and solves for that rate. Because NPV grows with project size, it tends to win when you have to pick between mutually exclusive options. IRR returns a percentage, which is handier for ranking. You'll see both in CFA, ANBIMA CEA/CFG and the finance core of most MBAs.

Applications

Capital budgeting, valuing M&A targets, real estate work with cap rates, BNDES infrastructure deals, PMP project finance, and CFA Level 1-2.

FAQ

Which rate to use? For company projects, use the cost of capital (WACC). For personal decisions, use your opportunity cost.

NPV vs IRR which to prefer? Lean on NPV when scale matters, and reach for IRR when the projects you're comparing require the same investment.

How to handle terminal value? Tack on a Gordon growth perpetuity, discounted back to year n: TV = CF_n+1 / (r-g) / (1+r)^n.