Texas Instruments BA II Plus Tutorial

Presented by Arif Irfanullah, CFA

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 Part 1 Contents
1. Setup: floating decimal, payments per year
2. Future value of single payment (annual compounding)
3. Future value of single payment (quarterly compounding)
4. Future value of single payment (continuous compounding)
5. Present value of single payment (annual compounding)
6. Present value of single payment (continuous compounding)
7. Compute I/Y given PV, FV and N
8. Nominal and effective rates

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 Setup
Key Strokes Explanation Display
[2nd] [FORMAT] Get into format mode DEC = 2
9 [ ENTER ] Set to floating decimal DEC = 9
[2nd] [QUIT] Return to standard calculator mode 0

Key Strokes Explanation Display

[2nd] [P/Y] Set payments per year 12.00
1 [ ENTER ] Set to 1 payment per year 1.00
[2nd] [QUIT] Return to standard calculator mode 0

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 Future Value of Single Payment (Annual Compounding)
Invest $100 today at 10% compounded annually.
How much will this become after 5 years?

Key Strokes Explanation Display

[2nd] [QUIT] Return to standard calculator mode 0
[2nd] [CLR TVM] Clear TVM Worksheet 0
5 [N] Five years/periods N=5
10 [I/Y] Set interest rate I/Y = 10
100 [PV] Set present value PV = 100
0 [PMT] Set payment PMT = 0
[CPT] [FV] Compute future value -161.051

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 Future Value of Single Payment (Quarterly Compounding)
Invest $100 today at 10% compounded quarterly.
How much will this become after 5 years?

Key Strokes Explanation Display

[2nd] [QUIT] Return to standard calculator mode 0
[2nd] [CLR TVM] Clear TVM Worksheet 0
20 [N] Five years/periods N = 20
2.5 [I/Y] Set interest rate I/Y = 2.5
100 [PV] Set present value PV = 100
0 [PMT] Set payment PMT = 0
[CPT] [FV] Compute future value -163.861

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 Future Value of Single Payment (Continuous Compounding)
Invest $100 today at 10% compounded continuously.
How much will this become after 5 years?

Key Strokes Explanation Display

[2nd] [QUIT] Return to standard calculator mode 0
0.5 [2nd] [ex] Compute erT 1.6487
X 100 164.87

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 Present Value of Single Payment (Annual Compounding)
You will get $161.05 in 5 years. Interest rate is 10%.
What is the present value?

Key Strokes Explanation Display

[2nd] [QUIT] Return to standard calculator mode 0
[2nd] [CLR TVM] Clear TVM Worksheet 0
5 [N] Five years/periods N=5
10 [I/Y] Set interest rate I/Y = 10
0 [PMT] Set payment PMT = 0
161.05 [FV] Set future value FV = 161.05
[CPT] [PV] Compute present value -99.999

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 Present Value of Single Payment (Continuous Compounding)
You will get 164.87 after 5 years. How much is this worth today.
Assume continuous compounding with a stated rate of 10%?

Key Strokes Explanation Display

[2nd] [QUIT] Return to standard calculator mode 0
0.5 [+/-] [2nd] [ex] Compute e -rT 0.60653
X 164.87 99.9987

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 Compute I/Y Given PV, FV and N
Invest $100 today and get 161.05 in 5 years.
What is the interest rate?

Key Strokes Explanation Display

[2nd] [QUIT] Return to standard calculator mode 0
[2nd] [CLR TVM] Clear TVM Worksheet 0
5 [N] Five years/periods N=5
100 [PV] Set present value PV = 100
0 [PMT] Set payment PMT = 0
161.05[+/-] [FV] Set future value FV = -161.05
[CPT] [I/Y] Compute interest rate I/Y = 10

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 Nominal and Effective Rates
Calculate EAR for:
12% with quarterly compounding
12% with continuous compounding

Key Strokes Explanation Display

[2nd] [ICONV] Enter interest rate conversion mode NOM = 0
[2nd] [CLR WRK] Clear previously stored values NOM = 0
[12] [ENTER] Enter nominal rate = 12 NOM = 12
[↑] [4] [ENTER] Enter compounding frequency = 4 C/Y = 4
[↑] [CPT] Compute effective rate EFF = 12.55

Tip: For continuous compounding enter a high value for C/Y, for
example C/Y = 10,000

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 Part 2 Contents
1. Future value of ordinary annuity
2. Future value of annuity due
3. Present value of ordinary annuity
4. Present value of annuity due
5. Compute PMT given PV, I/Y and FV
6. Present value given I/Y, PMT and FV
7. NPV for uneven cash flow
8. IRR for uneven cash flow

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 Future Value of Ordinary Annuity
You plan to invest $100 at the end of every year for the next three years.
What is the future value at the end of 3 years assuming an interest rate of 10%?

Key Strokes Explanation Display

[2nd] [QUIT] Return to standard calculator mode 0
[2nd] [CLR TVM] Clear TVM Worksheet 0
3 [N] Five years/periods N=3
10 [I/Y] Set interest rate I/Y = 10
0 [PV] Set present value PV = 0
100 [PMT] Set payment PMT = 100
[CPT] [FV] Compute future value -331

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 Future Value of Annuity Due
You invest $100 now, $100 at the end of year 1 and $100 at the end of year 2.
The interest rate is 10%. What is the future value at the end of 3 years?

Key Strokes Explanation Display

[2nd] [BGN] [2nd] [SET] Puts in BGN mode 0
[2nd] [QUIT] Return to standard calculator mode 0
[2nd] [CLR TVM] Clears TVM Worksheet 0
3 [N] Five years/periods N=3
10 [I/Y] Set interest rate I/Y = 10
0 [PV] Set present value PV = 0
100 [PMT] Set payment PMT = 100
[CPT] [FV] Compute future value -364.1

Tip: Switch back to END mode.

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 Present Value of Ordinary Annuity
You will get $100 at the end of every year for 3 years.
What is the present value assuming an interest rate of 10%?

Key Strokes Explanation Display

[2nd] [QUIT] Return to standard calculator mode 0
[2nd] [CLR TVM] Clear TVM Worksheet 0
3 [N] Five years/periods N=3
10 [I/Y] Set interest rate I/Y = 10
0 [FV] Set future value FV = 0
100 [PMT] Set payment PMT = 100
[CPT] [PV] Compute present value -248.685

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 Present Value of Annuity Due
You get $100 now and then again at the end of year 1 and year 2.
What is the present value assuming an interest rate of 10%?

Key Strokes Explanation Display

[2nd] [BGN] [2nd] [SET] Put calculator in BGN mode 0
[2nd] [CLR TVM] Clear TVM Worksheet 0
3 [N] Five years/periods N=3
10 [I/Y] Set interest rate I/Y = 10
0 [FV] Set future value FV = 0
100 [PMT] Set payment PMT = 100
[CPT] [PV] Compute present value -273.55

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 Compute Payments Given PV, I/Y and FV
You borrow $100,000 at 6% and need to make monthly payments over thirty years.
What is your monthly payment amount?

Key Strokes Explanation Display

[2nd] [QUIT] Return to standard calculator mode 0
[2nd] [CLR TVM] Clear TVM Worksheet 0
30 x 12 = [N] Five years/periods N = 360
6 ÷ 12 = [I/Y] Set interest rate I/Y = 0.5
100,000 [PV] Set present value PV = 100,000
0 [FV] Set future value FV = 0
[CPT] [PMT] Compute monthly payments -599.55

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 Present Value Given Payments and Future Value
You will receive $100 at the end of every year for five years. In addition you will get
$1,000 at the end five years. The interest rate is 8%. What is the present value?

Key Strokes Explanation Display

[2nd] [QUIT] Return to standard calculator mode 0
[2nd] [CLR TVM] Clear TVM Worksheet 0
5 [N] Set number of periods N=5
8 [I/Y] Set interest rate per period I/Y = 8
100 [PMT] Set payment PMT = 100
1000 [FV] Set future value FV = 1000
[CPT] [PV] Compute present value -1079.85

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 NPV for Uneven Cash flow
Year 0 1 2 3 4
Cash flow -100 -50 100 0 200

Key Strokes Explanation Display

[CF] [2nd] [CLR WRK] Clear CF Register CF0 = 0
100 [+/-] [ ENTER ] Initial Outlay CF0 = -100
[↓] 50 [+/-] [ENTER] Period 1 CF C01 = -50
[↓][↓] 100 [ENTER] Period 2 CF C02 = 100
[↓][↓] 0 [ENTER] Period 3 CF C03 = 0
[↓][↓] 200 [ENTER] Period 4 CF C04 = 200
[↓] [NPV] 10 [ENTER] Set Interest Rate I = 10
[↓] [CPT] Compute NPV NPV = 73.79

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 IRR for Uneven Cash flow
Year 0 1 2 3 4
Cash flow -100 -50 90 90 90

Key Strokes Explanation Display

[CF] [2nd] [CLR WRK] Clear CF Register CF0 = 0
100 [+/-] [ ENTER ] Initial Outlay CF0 = -100
[↓] 50 [+/-] [ENTER] Period 1 CF C01 = -50
[↓] [↓] 90 [ENTER] Period 2 CF C02 = 90
[↓] 3 [ENTER] Frequency F02 = 3
[↓] [IRR] [CPT] Compute IRR IRR = 25.189

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 Part 3 Contents

1. Standard deviation of a population and sample

2. Expected value and standard deviation of a random variable

3. Factorial, permutations and combinations

4. STO, RCL

5. Backspace

6. Exponent (Yx)

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 Standard Deviation for Population and Sample
15 -5 12 22

Key Strokes Explanation Display

[2nd] [DATA] Enter data mode X01
[2nd] [CRL WORK] Clear data registers X01
15 [ ENTER ] Enter 1st value X01 = 15
[↓][↓] 5 [+/-] [ENTER] Enter 2nd value X02 = -5
[↓][↓] 12 [ENTER] Enter 3rd value X03 = 12
[↓][↓] 22 [ENTER] Enter 4th value X04 = 22
[↓] [2nd] [STAT] Puts calculator into stats mode.
[2nd] [SET] repeatedly Press repeatedly till you see  1-V
[↓] Number of data points n=4
[↓] Mean X = 11
[↓] Sample standard deviation Sx = 11.46
[↓] Population standard deviation σx = 9.92

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 Expected Value & Standard Deviation of a Random Variable
State of Economy Probability EPS
Good 0.4 $9
Average 0.5 $6
Weak 0.1 $1

Keystrokes Explanation Display

[2nd] [DATA] Enter data entry mode
[2nd] [CLR WRK] Clear data registers X01
9 [ENTER] 1st possible value of random variable X01 = 9
[↓] 40 [ENTER] Probability of 40% for X01 Y01 = 40
[↓] 6 [ENTER] 2nd possible value of random variable X02 = 6
[↓] 50 [ENTER] Probability of 50% for X02 Y02 = 50
[↓] 1 [ENTER] 3rd possible value of random variable X03 = 1
[↓] 10 [ENTER] Probability of 10% for X03 Y03 = 10
[2nd] [STAT] Puts calculator into stats mode.
[2nd] [SET] Press repeatedly till you see  1-V
[↓] Total number of entries N = 100
[↓] Expected value of random variable X = 6.7
[↓] Sample standard deviation Sx = 2.38
[↓] Population standard deviation σx = 2.37

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 Factorial, Permutations and Combinations

Factorial
Example: Keystrokes for 4!: 4 2ND x!

Permutations
Example: Keystrokes for 6P2: 6 2ND nPr 2 =

Combinations
Example: Keystrokes for 6C2: 6 2ND nCr 2 =

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 STO, RCL, Backspace and Exponent
Store and recall

Backspace

Exponent
Example: 1.043 Keystrokes: 1.04 Yx 3 =

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Thank you!

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