As easy as 1,2,3 - Posted by John Behle

Posted by John Behle on June 03, 1999 at 23:49:31:

As I titled the book, discounting is as easy as 1,2,3

STEP ONE - identify cash flows.

STEP TWO - solve for any unknown factors

STEP THREE - discount and add cash flows

STEP ONE

This is easy in that there is only one cash flow. The cash flow is XX amount for 60 months

STEP TWO

The unknown factor is what the amount of the monthly payment will be. You’ll have $10,000 (PV) at 12.75% (I) over 60 months (N). There is no lump sum or future payment, so that is -0- (FV). Enter those in and solve fot the payment and you should get $226.25

STEP THREE

Then, to discount this, all you need to do is substitute the price you paid (investment) of $3,000 into the PV register and solve for I that will be your yield or IRR.

If you need exact keystrokes, I haven’t had a TI35 for a long time and I’ve been out of film for my photographic memory for few years, so you may need to check the manual for whether you push the 2nd key or the Solve key to compute a figure.

Drop me your address and I’ll send you a copy of my book. You can read it and if it works for you and helps you make tons of money, you can tell the world