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Ask Lane Your Own Question
Category: Finance
Satisfied Customers: 9706
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Re: HP 12C calculator. Have read the user manual but am a

Customer Question

Re: HP 12C calculator. Have read the user manual but am a novice so hope you could help with a specific issue. I have lease income of $2,297 per month with 3% annual increase over next 18 years. I would like to know the present value of that income stream at a 6% return. Hope you can help with the keystrokes because I have other leases I am analyzing also.
Submitted: 3 months ago.
Category: Finance
Expert:  Lane replied 3 months ago.



Looks like no one's picking this up, so I'll try to help.


With the HP 12C, there is no real shortcut to calculating the PV of an income streat that isn't level.


For level cash flows, we have the five keys that make things easy.


With an increasing lease like this, even though the increase is at a give rate, this is still treated as a series of uneven cash flows.


Excel would be a much easier way to do this.


But in addition to the previously mentioned financial keys, the 12C also has keys labeled CFo and CFj (the cash flow keys) to handle a series of uneven cash flows.


Suppose that you are offered an investment which will pay the following cash flows at the end of each of the next five years:

Period .....Cash Flow








How much would you be willing to pay for this investment if your required rate of return is 12% per year?


We could, of course, solve this problem by finding the present value of each of these cash flows individually and then summing the results.


Instead, we can use the cash flow keys (CFo, and CFj - Note that on your calculator the 0 and the J are subscript on the key).


What you'll have to do is enter the cash flows exactly as shown in the table. Again, we must clear the cash flow registers first. In this case we need to press f X><Y. Now, enter the time period 0 cash flow into CF0 and the remaining cash flows into CFj. To enter the cash flows, simply press g then the appropriate key (either PV or PMT). We must also enter the interest rate into i. To get the present value of the cash flows press f PV (you'll see that the shifted version of PV is NPV). We find that the present value is $1,000.17922. Note that you can easily change the interest rate by simply entering a different rate into i and the solving for NPV again.


SO in your case the first cash flow(CFo) is 2297 x 12 = 27564, then to get each subsequent cash flow (CFj) you'll multiply that 2293 x 1.03 anualize that and then enter that as the next cash flow, doing that for 16 more times entering each subsequent cash flow.


Once you have all cash flows entered (the first CFo and the next 17 CFj's) enter your 6% as i and solve for PV

Expert:  Lane replied 3 months ago.

Please let me know if you have any questions at all.


If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the faces or stars on your screen, and then clicking “submit")

JustAnswer will not credit me for the work unless you do.


Thank you!


I have a law degree, (Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986. (bought my first HP-12C in 1986, coincidentally)