Quick Guide to using your Texas BAII Plus

1) Always reset the calculator to remove all unfinished calculations, all store memories, all worksheet data and restore the calculator to default settings before embarking on a new calculation. Procedures Note: [QUIT] Boxed words refers to buttons 2nd [RESET] 2nd ENTER
Words in [ ] refers to buttons with these words above them

2) Although the calculator stores values of up to 13 decimal places accuracy, it only displays 2 decimal places. You can change the number of decimal places displayed by: Procedures Enter the number of decimal places 2nd [QUIT] 2nd [FORMAT] you want from 0 to 9. 9 gives a floating decimal place format. 3) Using the Time-Value-of-Money worksheet
Note: Check if resetting your calculator sets P/Y=12 (12 payments a year), C/Y=12 (compounded 12 times a year) and END (payment is given at the end of each period, not at the beginning). Negative values for PV, PMT and FV are considered as cash outflows. Relevant Keys and their Meanings

Example: You borrow $75,000 at an interest rate of 8.5%, making quarterly payments of $1,732.71 for 30 years. (a) Finding stated annual interest rate, given all other values Procedure 1) Reset all to default 2) Set payments per year to 4 3) Return to calculator mode 4) Enter number of years 5) Loan amount 6) Value of each payment 7) Compute interest (b) Finding loan amount, given all other values Procedure Repeat Steps 1 to 4 as above Input Interest Input value of each payment Compute loan amount Keystroke Display N=120.00 I/Y =8.50 $1,732.71 PMT=-1,732.71 PV=75,000.18 $1,732.71 Keystroke Display RST 0.00 P/Y=4.00 0.00 N=120.00 PV= 75,000.00 PMT=-1,732.71 I/Y =8.50 (c) Finding payment per period, given first payment is at the beginning of each period, and all other values. Procedure Repeat Steps 1 to 5 as in (a) Input Interest Set beginning of period payments Return to calculator mode Compute payment per period Keystroke Display PV=75,000.00 I/Y=8.50 BGN 0.00 PMT=-1,696.65
Relevant Keys and their Meanings

4) Using the cashflow worksheet Example: A company plans to pay $7000 for a new machine and would like a 20% annual return on investment. Over the next 6 years, the company expects to receive the following cashflows.

(a) Calculating NPV of investment in machine Procedures Keystrokes 1) Set all variables to default 2) Select cashflow worksheet 3) Enter initial cashflow 4) Enter cashflow for first year 5) Enter cashflow for years two to five 6) Enter cashflow for sixth year 7) Access NPV 8) Enter interest rate per period 9) Compute net present value (b) Computing internal rate of return of investment in machine Procedures Repeat Steps 1 to 6 of above Access IRR Compute IRR 5) Using the Bond worksheet (a) Computing bond price Procedures 1)Set all variables to default 2) Select bond worksheet 3) Enter settlement date 4) Enter coupon rate 5) Enter redemption date 6) Leave redemption value as it is. 7) Select day-count method 8) Number of coupon payments per year 9) Enter yield 10) Compute price (b) Computing yield to maturity Procedures Repeat Step 1 to 8 as above Skip yield Enter price Compute yield Keystrokes Display 2/Y YLD=0.00 PRI=98.56 YLD=8.00 Keystrokes

Display RST 0.00 CF0= 0.00 CF0= -7,000.00 C01=3,000.00 then F01=1.00 C02=5,000.00 then F01=4.00 C03=4,000.00 then F01=1.00 I=0.00

20

I=20.00 NPV=7,266.44

Display IRR=0.00 IRR=52.71

Keystrokes

Display RST 0.00 SDT=12-31-1990 SDT=6-12-1996 CPN=7.00 RDT=12-31-1997 100.00 360 2/Y YLD=8.00 PRI=98.56

Remarks US Date format MM-DD-YYYY European format DD-MM-YYYY Note the format your calculator use 6.1286. = June 12 1986 7%

% of bond par value Day count either ACT or 360 2 coupon payments a year. 1/Y = one coupon payment a year Yield to maturity or discount rate

98.56

Remarks US Date format MM-DD-YYYY European format DD-MM-YYYY Note the format your calculator use 6.1286. June 12 1986 Either press up or down till u see YLD=0.00 again, then press compute.

Things to note: For US bonds, yield is often calculated based on a 360 day year. ACT day count takes into consideration the actual number of days in the year, i.e. 365.