How to Use the BA II Plus Financial Calculator: TVM, NPV and IRR Keystrokes With Examples

Setting Up Your Calculator (Do This Once)

The BA II Plus ships with settings that silently cause wrong answers in most textbook problems. Fix them before your next homework set:

Why set payments per year (P/Y) to 1? The factory default is 12, which means the calculator divides your interest rate by 12 behind the scenes. Setting P/Y to 1 means what you type is what it uses — you adjust N and I/Y yourself for monthly problems, which is clearer and less error-prone.

The Sign Convention That Confuses Everyone

The calculator thinks in cash flows from your point of view: money leaving your pocket is negative, money coming back is positive. If you deposit $1,000 today, PV is −1,000 and the future value comes out positive. If you enter both PV and FV as positive numbers when solving for a rate or N, you get "Error 5" because no investment can have money only flowing in. Enter outflows with the [+|-] key, not the minus key.

Future Value and Present Value

Example 1 — Future value. You invest $1,000 for 5 years at 8% compounded annually. How much will you have?

Example 2 — Present value. You need $5,000 in 4 years. At 6% annually, how much must you invest today?

The negative sign is not an error — it tells you the $3,960.47 is an outflow. If the concept behind discounting still feels shaky, review our time value of money guide before memorising keystrokes.

Loan and Mortgage Payments

Example 3. A $20,000 car loan at 6% annual interest, repaid monthly over 5 years. What is the monthly payment?

Note the conversions: 5 years × 12 = 60 periods, and 6% ÷ 12 = 0.5% per month. Mixing annual N with monthly I/Y (or the reverse) is the most common loan-problem mistake. To see how each payment splits between interest and principal, use the amortisation worksheet: [2nd][PV] (AMORT), set P1 and P2 to the payment range, then scroll down for BAL, PRN and INT.

Annuities Due (BGN Mode)

When payments happen at the start of each period — rent, insurance premiums, many savings plans — you have an annuity due.

Example 4. You save $2,000 at the beginning of each year for 10 years at 7%. What will you have at the end of year 10?

NPV and IRR With the Cash Flow Worksheet

Example 5. A project costs $10,000 and returns $3,000, $4,000 and $6,000 over three years. The required return is 10%. Find NPV and IRR.

NPV is positive and IRR exceeds the 10% hurdle, so the project creates value. The F01, F02 fields are frequencies — if the same cash flow repeats, enter it once and set the frequency instead of typing it repeatedly. For when NPV and IRR disagree and which one to trust, see net present value explained.

Converting APR to Effective Annual Rate

Example 6. A credit card charges 12% APR compounded monthly. What is the effective annual rate?

The Six Most Common Calculator Errors

1. Not clearing TVM between problems ([2nd][FV]).
2. P/Y left at 12 so every rate is silently divided by 12.
3. Mismatched periods: monthly payments with an annual N or annual rate.
4. Forgetting BGN mode — either leaving it on after an annuity due, or forgetting to turn it on.
5. Same signs on PV and FV when solving for rate or periods (Error 5).
6. Entering the rate as a decimal: type 8 for 8%, not 0.08.

Once the mechanics are automatic, apply them to the topics where TVM matters most: bond pricing (see our bond valuation guide), capital budgeting (NPV, WACC and capital budgeting) and lease liabilities in accounting (ASC 842 leases).