HEWLETT-PACKARD 10BII TUTORIAL
To begin, look at the face of the calculator. Every key (except two, the gold and purple shift keys) on the 10BII has two or possibly three functions: each key’s primary function is noted in white on the key itself, while each key’s secondary function is noted in gold. A third possible function is noted in purple over the key. For business purposes, we will be focusing on the white and gold functions. To use the function on the key, simply press the key. To access the golf function on each key, first press the key with the solid gold face, which we will call the “gold shift” key, and then press the desired function key. (Note that the gold shift key is near the lower left corner of the calculator keyboard.)
To turn on the calculator on, press ON.
Note that the ON key is on the lower left corner of the keyboard—the face of the key has a white “ON,” while the word “OFF” appears on the bottom of the key. To conserve the battery, the calculator turns itself off about 10 minutes after your last keystroke.
To turn the calculator off, press ¢ OFF.
Here we are using the solid black square to represent the gold shift key. Thus, the keystrokes to turn the calculator off are (1) hit the gold shift key, and (2) hit the ON key. Note that the word “OFF” appears below the ON in gold. Thus, by hitting the gold shift key first, we are activating the gold function above the ON key, which is the off function. Also, note that hitting the gold shift key places a little “shift” in the lower left corner of the display. Press the gold shift key again and the word “shift” disappears. The ¢ is a toggle key that switches back and forth between the “regular” and the “gold” functions. ¢ is like the typewriter shift key. After you press ¢, look only at gold writing.
Note that the calculator has a continuous memory, so turning it off does not affect any data stored in the calculator.
To clear the calculator’s memory, press ¢ C ALL.
If we did not press ¢, we would input the data shown on the screen to memory. Clearing the calculator is very important, since unwanted data in memory can result in improper calculations, and hence wrong answers. It is best to get into the habit of automatically clearing memory before starting a calculation. Occasionally, you may purposely want to save data, but, in general, you will be entering all new data, so starting with a clear memory is the safest approach.
There are three different levels of clearing data:
¢ C ALL clears all memory and the display.
C clears the entire display, but not the memory.
Ü clears numbers on the display one at a time if you made a mistake entering data.
Changing the Display
Enter 5555.5555
To change decimals from 2 to 4, press ¢ DISP 4: 5,555.5555 is displayed.
To change from 4 places to 2, press ¢ DISP 2: 5,555.56 is displayed.
We usually set the display to 2 places, which is especially convenient when working with dollars and percentages. However, we often use 4 places when dealing with interest rates and rates of return that are entered as decimals.
If periods and commas are reversed, press ¢ ./, (Many European countries use a ./, convention that is just the opposite of ours.)
Note that “PEND means something is pending. For example, press 4 ¸ . The calculator is waiting for the denominator, so “PEND” appears in the display.
Enter 6 and = to get 0.67.
Press ¢ DISP 4 to see 0.6667.
Press ¢ DISP 2 to shift back to 2 decimal places.
To control the brightness of the display, hold down ON and press + or -.
Periods per Year Setting
One important setting that can cause problems is the periods per year setting. To check the current setting, press ¢ and C ALL. By holding down C ALL, one can check the display for periods per year. The calculator comes pre-set at 12 periods per year; that is, it assumes calculations will be done on a monthly basis. However, accounting and finance textbook problems generally use 1 period/year. To change to 1/year:
Press ¢ C ALL.
Press 1 ¢ P/YR
Now the calculator is set to assume 1 period/year. To confirm this setting, press and hold ¢ C ALL. Unless needed for other work, we generally leave the calculator setting at 1 period per year.
Time Value of Money (TVM)
The TVM keys are located on the top row of the keyboard.
N I/YR PV PMT FV
In general, TVM problems involve four variables—three are known and the fourth is unknown.
Lump Sums
To begin, we consider TVM calculations with single (lump) sums. In this situation, we do not use the PMT key, so be sure to either clear all, which sets the payment (PMT) equal to 0, or enter 0 as the PMT when entering the input data. If you know any 3 variables, you can find the value of the 4th.
Example 1:
What is the FV (future value) after 3 years if the interest rate is 26%? First, clear with ¢ C ALL. If you observe other than 1 P_Yr, change by entering 1 ¢ P/YR. Check by ¢ C ALL.
Next, enter the data.
3 N
26 I/YR
100 PV
To determine the FV simply press FV key and the FV of -$200.04 is displayed.
The HP is programmed so that if the PV is + then the FV is displayed as – and vice versa, because the HP assumes that one is an inflow and the other is an outflow.
Example 2:
What is the PV of $500 due in 5 years if the interest rate is 10%? Clear first and then enter the following data.
5 N
10 I/YR
500 FV
Pressing the PV key reveals that $310.46 will grow to $500 in 5 years at a 10% rate.
Example 3:
Assume a bond can be purchased today for $200. It will return $1,000 after 14 years. The bond pays no interest during its life. What rate of return would you earn if you bought the bond?
14 N
-200 PV (key in 200 and then use the +/- key to change sign)
1000 FV
Simple press the I/YR key and the HP calculates the rate of return to be 12.18%.
Remember that the HP is programmed so that if the PV is + then the FV is displayed as – and vice versa because the HP assumes that one is an inflow and the other is an outflow.
Now suppose you learn that the bond will actually cost $300. What rate of return will you earn?
Override the –200 by entering 300 =/- PV , then press I/YR to get 8.98%. If you pay more for the bond, you earn less on it. The important thing, though, is that you can do “what if” analyses with the calculator.
Now do nothing except ¢ OFF to turn off the calculator. Then turn on the calculator ON. The display shows 0.00. Is the memory erased? Not completely. What was on the screen is gone, but press RCL N to get N = 14.00. The other memory registers also retain info unless you press ¢ C ALL.
Ordinary Annuities
Example 1:
What is the FV of an annuity of $100 paid at the end of each year for 5 years if the interest rate equals 6%?
0 6% 1 2 3 4 5
|------------------|-----------------|-----------------|------------------|------------------|
-100 -100 -100 -100 -100
5 N
6 I/YR
-100 PMT
Now press the FV key, and an FV of $563.71 is displayed.
Example 2:
What is the PV of the same annuity?
Leave data in calculator, but enter 0 as the FV to override, then press PV to get $421.24.
Varying
Cash Flows:
Example 1:
What is the PV of the following cash flows if the interest rate is 10%?
Year 1: 1,000
Year 2: 2,000
Year 3: 3,000
0 CFj
1000 CFj
2000 CFj
3000 CFj
10 I/YR
Pressing ■ and NPV and $4,816 is displayed as the PV of the varying cash flows for 3 years.
Example 2:
What is the NPV of the following cash flows if the interest rate is 10% and we spent $4,000 up front to bring about this following varying cash flows at 10%?
Year 1: 1,000
Year 2: 2,000
Year 3: 3,000
4,000 +/- CFj
1,000 CFj
2,000 CFj
3,000 CFj
10 I/YR
Pressing ■ and NPV and $816 is displayed as the NPV of an cost of $4,000 and inflow of 3 varying years.