NPV and IRR on the HP 12C

The HP 12C handles uneven cash flows through three keys: g CF0 for the initial outlay, g CFj for each subsequent cash flow, and g Nj to set the count when a cash flow repeats. Once the flows are stored, f NPV and f IRR compute the answers in two keystrokes.

The keystroke count is shorter than the BA II Plus path, but the HP 12C does not surface the cash-flow list as a scrollable worksheet. The list lives in registers you cannot easily inspect, which makes a stale list more dangerous, not less. This page walks four CFA-style problems end to end with the exact keystrokes and the expected answers to four decimals.

If you use a BA II Plus, the BA II Plus version of this page covers the same four problems with TI keystrokes.

Open the HP 12C calculator

Contents

1. The cash-flow registers, in plain language
2. Worked example 1: simple uneven cash flows
3. Worked example 2: a repeated cash flow with Nj
4. Worked example 3: a non-standard discount rate
5. Worked example 4: IRR with a sign change
6. The four mistakes that cost candidates marks
7. Frequently asked questions

1. The cash-flow registers, in plain language

The HP 12C stores cash flows in dedicated registers:

• g CF0 stores the initial outlay. Sign convention applies: money the candidate parts with is negative.
• g CFj appends the next cash flow to the list.
• g Nj sets the frequency (count) of the most recently entered cash flow.

Once the list is built:

• f NPV reads the periodic discount rate from the i register and computes the net present value.
• f IRR solves for the periodic rate that sets NPV to zero.

Three rules apply to every problem:

1. Clear before entering. Press f CLEAR REG (also labelled f REG). This clears the financial registers and the cash-flow list in one keystroke.
2. Sign convention. Money the candidate parts with is negative. CHS flips the sign of the value in the X register before you store it.
3. Periodic rate, not annual. Store the periodic rate in i before pressing f NPV. For quarterly cash flows on a 12 percent annual rate, the value in i should be 3.

2. Worked example 1: simple uneven cash flows

Problem. A project requires a 10,000 outlay today and is expected to produce 4,000 in year 1, 5,000 in year 2, and 6,000 in year 3. At a 10 percent annual discount rate, compute NPV and IRR.

Keystrokes:

1. f CLEAR REG
2. 10000 then CHS then g CF0
3. 4000 then g CFj
4. 5000 then g CFj
5. 6000 then g CFj
6. 10 then i
7. f NPV

Expected NPV: 2,276.4838.

Continuing from the same CF list:

1. f IRR

Expected IRR: 21.6478 percent.

Replay this example in Charterly

3. Worked example 2: a repeated cash flow with Nj

Problem. A project requires a 50,000 outlay today and produces 8,000 in each of the next five years, followed by a 25,000 terminal cash flow in year 6. Compute NPV at 9 percent and IRR.

Keystrokes:

1. f CLEAR REG
2. 50000 then CHS then g CF0
3. 8000 then g CFj
4. 5 then g Nj (the 8,000 stored as CF1 now represents five consecutive years)
5. 25000 then g CFj
6. 9 then i
7. f NPV

Expected NPV: -3,976.1067.

f IRR gives expected IRR: 6.7045 percent.

Replay this example in Charterly

4. Worked example 3: a non-standard discount rate

Problem. A project requires a 20,000 outlay today and produces 6,000 quarterly for the next eight quarters. The annual discount rate is 12 percent, compounded quarterly. Compute NPV.

The HP 12C's CF registers are agnostic about period length. The candidate must convert the annual rate to the quarterly rate before storing it: 12 / 4 = 3 percent per quarter.

Keystrokes:

1. f CLEAR REG
2. 20000 then CHS then g CF0
3. 6000 then g CFj
4. 8 then g Nj
5. 3 then i
6. f NPV

Expected NPV: 22,118.1531 (project value including the outlay; the gross present value of the eight 6,000 flows in isolation is 42,118.1531).

Replay this example in Charterly

5. Worked example 4: IRR with a sign change

Problem. A project has cash flows -1,000, 5,000, -6,000. Compute IRR.

Keystrokes:

1. f CLEAR REG
2. 1000 then CHS then g CF0
3. 5000 then g CFj
4. 6000 then CHS then g CFj
5. f IRR

Expected IRR returned by the HP 12C: 100 percent. The other real root is 200 percent.

What this means for the exam. When a CFA problem includes non-conventional cash flows (more than one sign change in the sequence), the HP 12C IRR alone is not enough. Use NPV with a given discount rate as the decision rule. The HP 12C does not have a built-in Modified IRR (MIRR) key; the BA II Plus Professional has one, but the standard BA II Plus does not either. MIRR is computed by hand on the rare exam question that requires it.

Replay this example in Charterly

6. The four mistakes that cost candidates marks

The HP subset of the twelve calculator mistakes Charterly tracks.

1. CF list has leftover entries (the HP analogue of mistake M5). Your NPV and IRR are off by the amount of a stale flow. The HP 12C makes this harder to spot than the BA II Plus because there is no worksheet to scroll. Fix: press f CLEAR REG before every new problem.
2. Annual rate stored in `i` on a non-annual flow. Convert the annual rate to the periodic rate before pressing i. The HP 12C does not have a Periods per Year (P/Y) setting to do this for you. Mistake H2 in Charterly's HP rule set.
3. Nj left at the default on a repeated flow. You entered the value once and never set the count. The flows are treated as one occurrence each, and the schedule is wrong. Fix: press g Nj immediately after the relevant g CFj, with the count in X.
4. IRR with multiple roots. The HP 12C returns one root. Count the sign changes in the flow sequence first. If there is more than one, do not use IRR alone as the decision rule.

Charterly catches the stale-list case (rule H3 stale-registers and the CF list overlap) and the annual-rate-on-multi-period case (rule H2) in real time. The other two are workflow habits this page teaches.

See all twelve calculator mistakes

7. Frequently asked questions

Can the HP 12C compute Modified IRR (MIRR)? No. The HP 12C does not have a built-in MIRR key. MIRR is computed by hand on the rare exam question that requires it.

What is the maximum number of cash flows the HP 12C holds? Twenty registers for the cash-flow list (CF1 through CF20), plus CF0. The Nj frequency key compresses repeated flows, so a real schedule of more than 20 periods can fit if some flows repeat.

How do I review the cash-flow list after entry? Press RCL n to see the number of cash flows currently entered. Press RCL g CFj and arrow through to see individual flows on later HP 12C revisions. The standard HP 12C does not have a worksheet-style review, which is why f CLEAR REG before every new problem is the safest habit.

Does NPV expect the periodic rate or the annual rate? The periodic rate, stored in i. The HP 12C does not have a Periods per Year setting, so the conversion is the candidate's job.

Does Charterly auto-fix the cash-flow list for me? No. Charterly surfaces a warning if the financial registers have leftover values from a prior problem. It never silently changes your inputs.

Where do I practice problems like these? Charterly's question library is tagged by Learning Outcome Statement (LOS), including cash-flow-specific LOSs. Browse the LOS tagged drills.

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