Appendix — Reference Information

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This appendix includes supplemental information to help you use your

BA II PLUSé and BA II PLUSé PROFESSIONAL calculator:

• Formulas

• Error conditions

• Accuracy information

• IRR (internal-rate-of-return) calculations

• Algebraic operating system (AOS™)

• Battery information

• In case of difficulty

• TI product service and warranty information

Formulas

This section lists formulas used internally by the calculator.

Time Value of Money

where: PMT Ā0

y =C/Y P P/Y

x =(.01 Q I/Y) P C/Y

C/Y =compounding periods per year

P/Y =payment periods per year

I/Y =interest rate per year

where: PMT =0

The iteration used to compute i:

i ey lnx + 1= –1

i –FV PV1 N= – 1

0 PV PMT Gi

1 1 + i–N –

i

= + ----------------------------- + FV 1 + i–N

I/Y =

where: x = i

y =P/Y P C/Y

Gi = 1 + i Q k

where: k =0 for end-of-period payments

k =1 for beginning-of-period payments

where: i ƒ0

N = L(PV + FV) P PMT

where: i =0

where: i ƒ0

PMT = L(PV + FV) P N

where: i =0

where: i ƒ0

PV = L(FV + PMT Q N)

where: i =0

100 C Y ey lnx + 1⁄– 1

N

PMT Gi – FV i

PMT Gi + PV i

----------------------------------------------

ln

ln1 + i

= ---------------------------------------------------------

PMT

–i

Gi

----- PV PV + FV

1 + iN – 1

= + ---------------------------

PV

PMT Gi

i

------------------------ – FV 1

1 + iN ------------------

PMT Gi

i

= – ------------------------

where: i ƒ0

FV = L(PV + PMT Q N)

where: i =0

Amortization

If computing bal(), pmt2 = npmt

Let bal(0) = RND(PV)

Iterate from m = 1 to pmt2

then: bal( ) =bal(pmt2)

GPrn( ) =bal(pmt2) N bal(pmt1)

GInt( ) =(pmt2 N pmt1 +1) Q RND(PMT) N GPrn( )

where: RND =round the display to the number of decimal

places selected

RND12 =round to 12 decimal places

Balance, principal, and interest are dependent on the values of PMT, PV,

I/Y, and pmt1 and pmt2.

Cash Flow

where:

FV

PMT Gi

i

------------------------ 1 + iN – PV

PMT Gi

i

+ ------------------------

= 

Im = RNDRND12–i balm – 1

balm= balm – 1– Im + RNDPMT



NPV CF0 CFj1 + i

-Sj – 1 1 1 + i

-nj – 

i

----------------------------------

j = 1

N

= +

Sj

ni

i = 1

jj 1

0 j 0 = 

=

Net present value depends on the values of the initial cash flow (CF0),

subsequent cash flows (CFj), frequency of each cash flow (nj), and the

specified interest rate (i).

where: i is the periodic interest rate used in the calculation of NPV.

where: is the frequency of the kth cash flow.

IRR = 100 i, where i satisfies npv() = 0

Internal rate of return depends on the values of the initial cash flow

(CF0) and the subsequent cash flows (CFj).

i = I/Y 100

The calculator uses this formula to compute the modified internal rate of

return:

where: positive = positive values in the cash flows

negative = negative values in the cash flows

N = number of cash flows

rrate = reinvestment rate

frate = finance rate

NPV (values, rate) = Net present value of the values in the rate

described

NFV = 1 + ip NPV

p nk

k = 1

N

= 

nk

MOD – NPV (positive, rrate

NPV (negative, frate)

-----------------------------------------------------

1 ⁄N

= 1 + rrate– 1

Bonds1

Price (given yield) with one coupon period or less to redemption:

where: PRI =dollar price per $100 par value

RV =redemption value of the security per $100 par value (RV =

100 except in those cases where call or put features must be

considered)

R =annual interest rate (as a decimal; CPN _ 100)

M =number of coupon periods per year standard for the

particular security involved (set to 1 or 2 in Bond worksheet)

DSR =number of days from settlement date to redemption date

(maturity date, call date, put date, etc.)

E =number of days in coupon period in which the settlement

date falls

Y =annual yield (as a decimal) on investment with security held

to redemption (YLD P 100)

A =number of days from beginning of coupon period to

settlement date (accrued days)

Note: The first term computes present value of the redemption amount,

including interest, based on the yield for the invested period. The second

term computes the accrued interest agreed to be paid to the seller.

Yield (given price) with one coupon period or less to redemption:

1. Source for bond formulas (except duration): Lynch, John J., Jr., and Jan H. Mayle.

Standard Securities Calculation Methods. New York: Securities Industry Association,

1986.

PRI

RV 100 R

M

+ ------------------

1 DSR

E

----------- YM ----



+

-------------------------------------- AE

--- 100 R

M

= – ------------------

Y

RV

100

-------- RM

+ ----

PRI

100

--------- AE

--- RM---- 

+ 

– 

PRI

100

--------- AE

--- RM ----

+ 

--------------------------------------------------------------------------- M E

DSR

= --------------

Price (given yield) with more than one coupon period to redemption:

where: N =number of coupons payable between settlement date and

redemption date (maturity date, call date, put date, etc.). (If this

number contains a fraction, raise it to the next whole number;

for example, 2.4 = 3)

DSC =number of days from settlement date to next coupon date

K =summation counter

Note: The first term computes present value of the redemption amount,

not including interest. The second term computes the present values for

all future coupon payments. The third term computes the accrued

interest agreed to be paid to the seller.

Yield (given price) with more than one coupon period to redemption:

Yield is found through an iterative search process using the “Price with

more than one coupon period to redemption” formula.

Accrued interest for securities with standard coupons or interest at

maturity:

where: AI =accrued interest

PAR =par value (principal amount to be paid at maturity)

Modified duration:2

2. Source for duration: Strong, Robert A., Portfolio Construction, Management, and

Protection, South-Western College Publishing, Cincinnati, Ohio, 2000.

PRI

RV

1 YM - + ---

N – 1 DSC

E

+ -----------

------------------------------------------

100 RM

---- AE

– ---

100 RM

----

1 YM

+ ----



K – 1 DSC

E

+ -----------

------------------------------------------

K = 1

N

= + 

AI PAR RM

---- AE

= ---

Modified Duration Duration

1 YM

+ ----

= ------------------------

where Duration is calculated using one of the following formulas used to

calculate Macaulay duration:

• For a bond price with one coupon period or less to redemption:

• For a bond price with more than one coupon period to redemption:

Depreciation

RDV = CST N SAL N accumulated depreciation

Values for DEP, RDV, CST, and SAL are rounded to the number of

decimals you choose to be displayed.

In the following formulas, FSTYR = (13 N MO1) P 12.

Straight-line depreciation

First year:

Last year or more: DEP = RDV

Dur 1 YM - + ---



Dsr

Rv 100 R

M

+ ------------------

1 Dsr Y

E M

-------------------

+ 

2 -----------------------------------------

E M Pri

= ⋅---------------------------------------------------------------

CST – SAL

LIF

---------------------------

CST – SAL

LIF

--------------------------- FSTYR

Sum-of-the-years’-digits depreciation

First year:

Last year or more: DEP = RDV

Declining-balance depreciation

where: RBV is for YR - 1

First year:

Unless ; then use RDV Q FSTYR

If DEP > RDV, use DEP = RDV

If computing last year, DEP = RDV

Statistics

Note: Formulas apply to both x and y.

Standard deviation with n weighting (sx):

LIF + 2 – YR – FSTYRCST – SAL 

LIF LIF + 1 2 

------------------------------------------------------------------------------------------------------

LIF CST – SAL

LIF LIF + 1 2 

------------------------------------------------------------ FSTYR

RBV DB%

LIF 100

-------------------------------

CST DB%

LIF 100

------------------------------ FSTYR

CST DB%

LIF 100

------------------------------ RDV

1 ⁄2

x2

x

2

n

– -------------------

n

----------------------------------------

Standard deviation with n-1 weighting (sx):

Mean:

Regressions

Formulas apply to all regression models using transformed data.

Interest Rate Conversions

where: x =.01 Q NOM P CˆY

where: x =.01 Q EFF

Percent Change

1 ⁄2

x2

x

2

n

– -------------------

n – 1

----------------------------------------

x

x 

n

= ---------------

b

nxy – yx

nx2x2 –

= ---------------------------------------------------------

a

y – bx

n

= ---------------------------------

r

bx

y

= --------

EFF = 100 eC ⁄Y Inx 1– 1 

NOM = 100 C ⁄Y e1 C ⁄Y In x + 1– 1 

NEW OLD 1 %CH

100

+ -------------

#PD

=

where: OLD =old value

NEW =new value

%CH =percent change

#PD =number of periods

Profit Margin

Breakeven

PFT = P Q N (FC + VC Q)

where: PFT =profit

P =price

FC =fixed cost

VC =variable cost

Q =quantity

Days between Dates

With the Date worksheet, you can enter or compute a date within the

range January 1, 1950, through December 31, 2049.

Actual/actual day-count method

Note: The method assumes the actual number of days per month and

per year.

DBD (days between dates) = number of days II - number of days I

Number of Days I= (Y1 - YB) Q 365

+ (number of days MB to M1)

+ DT1

+

Number of Days II=(Y2 - YB) Q 365

+ (number of days MB to M2)

+ DT2

+

Gross Profit Margin Selling Price – Cost

Selling Price

= ----------------------------------------------- 100

Y1 – YB

4

------------------------

Y2 – YB

4

------------------------

where: M1 =month of first date

DT1 =day of first date

Y1 =year of first date

M2 =month of second date

DT2 =day of second date

Y2 =year of second date

MB =base month (January)

DB =base day (1)

YB =base year (first year after leap year)

30/360 day-count method3

Note: The method assumes 30 days per month and 360 days per year.

where: M1 =month of first date

DT1 =day of first date

Y1 =year of first date

M2 =month of second date

DT2 =day of second date

Y2 =year of second date

Note: If DT1 is 31, change DT1 to 30. If DT2 is 31 and DT1 is 30 or 31,

change DT2 to 30; otherwise, leave it at 31.

3. Source for 30/360 day-count method formula: Lynch, John J., Jr., and Jan H. Mayle.

Standard Securities Calculation Methods. New York: Securities Industry Association,

1986

DBD = Y2 – Y1 360 + M2 + M1 30 + DT2 – DT1 

Error Messages

Note: To clear an error message, press P.

This appendix includes supplemental information to help you use your

BA II PLUSé and BA II PLUSé PROFESSIONAL calculator:

• Formulas

• Error conditions

• Accuracy information

• IRR (internal-rate-of-return) calculations

• Algebraic operating system (AOS™)

• Battery information

• In case of difficulty

• TI product service and warranty information

Formulas

This section lists formulas used internally by the calculator.

Time Value of Money

where: PMT Ā0

y =C/Y P P/Y

x =(.01 Q I/Y) P C/Y

C/Y =compounding periods per year

P/Y =payment periods per year

I/Y =interest rate per year

where: PMT =0

The iteration used to compute i:

i ey lnx + 1= –1

i –FV PV1 N= – 1

0 PV PMT Gi

1 1 + i–N –

i

= + ----------------------------- + FV 1 + i–N

I/Y =

where: x = i

y =P/Y P C/Y

Gi = 1 + i Q k

where: k =0 for end-of-period payments

k =1 for beginning-of-period payments

where: i ƒ0

N = L(PV + FV) P PMT

where: i =0

where: i ƒ0

PMT = L(PV + FV) P N

where: i =0

where: i ƒ0

PV = L(FV + PMT Q N)

where: i =0

100 C Y ey lnx + 1⁄– 1

N

PMT Gi – FV i

PMT Gi + PV i

----------------------------------------------

ln

ln1 + i

= ---------------------------------------------------------

PMT

–i

Gi

----- PV PV + FV

1 + iN – 1

= + ---------------------------

PV

PMT Gi

i

------------------------ – FV 1

1 + iN ------------------

PMT Gi

i

= – ------------------------

where: i ƒ0

FV = L(PV + PMT Q N)

where: i =0

Amortization

If computing bal(), pmt2 = npmt

Let bal(0) = RND(PV)

Iterate from m = 1 to pmt2

then: bal( ) =bal(pmt2)

GPrn( ) =bal(pmt2) N bal(pmt1)

GInt( ) =(pmt2 N pmt1 +1) Q RND(PMT) N GPrn( )

where: RND =round the display to the number of decimal

places selected

RND12 =round to 12 decimal places

Balance, principal, and interest are dependent on the values of PMT, PV,

I/Y, and pmt1 and pmt2.

Cash Flow

where:

FV

PMT Gi

i

------------------------ 1 + iN – PV

PMT Gi

i

+ ------------------------

= 

Im = RNDRND12–i balm – 1

balm= balm – 1– Im + RNDPMT



NPV CF0 CFj1 + i

-Sj – 1 1 1 + i

-nj – 

i

----------------------------------

j = 1

N

= +

Sj

ni

i = 1

jj 1

0 j 0 = 

=

Net present value depends on the values of the initial cash flow (CF0),

subsequent cash flows (CFj), frequency of each cash flow (nj), and the

specified interest rate (i).

where: i is the periodic interest rate used in the calculation of NPV.

where: is the frequency of the kth cash flow.

IRR = 100 i, where i satisfies npv() = 0

Internal rate of return depends on the values of the initial cash flow

(CF0) and the subsequent cash flows (CFj).

i = I/Y 100

The calculator uses this formula to compute the modified internal rate of

return:

where: positive = positive values in the cash flows

negative = negative values in the cash flows

N = number of cash flows

rrate = reinvestment rate

frate = finance rate

NPV (values, rate) = Net present value of the values in the rate

described

NFV = 1 + ip NPV

p nk

k = 1

N

= 

nk

MOD – NPV (positive, rrate

NPV (negative, frate)

-----------------------------------------------------

1 ⁄N

= 1 + rrate– 1

Bonds1

Price (given yield) with one coupon period or less to redemption:

where: PRI =dollar price per $100 par value

RV =redemption value of the security per $100 par value (RV =

100 except in those cases where call or put features must be

considered)

R =annual interest rate (as a decimal; CPN _ 100)

M =number of coupon periods per year standard for the

particular security involved (set to 1 or 2 in Bond worksheet)

DSR =number of days from settlement date to redemption date

(maturity date, call date, put date, etc.)

E =number of days in coupon period in which the settlement

date falls

Y =annual yield (as a decimal) on investment with security held

to redemption (YLD P 100)

A =number of days from beginning of coupon period to

settlement date (accrued days)

Note: The first term computes present value of the redemption amount,

including interest, based on the yield for the invested period. The second

term computes the accrued interest agreed to be paid to the seller.

Yield (given price) with one coupon period or less to redemption:

1. Source for bond formulas (except duration): Lynch, John J., Jr., and Jan H. Mayle.

Standard Securities Calculation Methods. New York: Securities Industry Association,

1986.

PRI

RV 100 R

M

+ ------------------

1 DSR

E

----------- YM ----



+

-------------------------------------- AE

--- 100 R

M

= – ------------------

Y

RV

100

-------- RM

+ ----

PRI

100

--------- AE

--- RM---- 

+ 

– 

PRI

100

--------- AE

--- RM ----

+ 

--------------------------------------------------------------------------- M E

DSR

= --------------

Price (given yield) with more than one coupon period to redemption:

where: N =number of coupons payable between settlement date and

redemption date (maturity date, call date, put date, etc.). (If this

number contains a fraction, raise it to the next whole number;

for example, 2.4 = 3)

DSC =number of days from settlement date to next coupon date

K =summation counter

Note: The first term computes present value of the redemption amount,

not including interest. The second term computes the present values for

all future coupon payments. The third term computes the accrued

interest agreed to be paid to the seller.

Yield (given price) with more than one coupon period to redemption:

Yield is found through an iterative search process using the “Price with

more than one coupon period to redemption” formula.

Accrued interest for securities with standard coupons or interest at

maturity:

where: AI =accrued interest

PAR =par value (principal amount to be paid at maturity)

Modified duration:2

2. Source for duration: Strong, Robert A., Portfolio Construction, Management, and

Protection, South-Western College Publishing, Cincinnati, Ohio, 2000.

PRI

RV

1 YM - + ---

N – 1 DSC

E

+ -----------

------------------------------------------

100 RM

---- AE

– ---

100 RM

----

1 YM

+ ----



K – 1 DSC

E

+ -----------

------------------------------------------

K = 1

N

= + 

AI PAR RM

---- AE

= ---

Modified Duration Duration

1 YM

+ ----

= ------------------------

where Duration is calculated using one of the following formulas used to

calculate Macaulay duration:

• For a bond price with one coupon period or less to redemption:

• For a bond price with more than one coupon period to redemption:

Depreciation

RDV = CST N SAL N accumulated depreciation

Values for DEP, RDV, CST, and SAL are rounded to the number of

decimals you choose to be displayed.

In the following formulas, FSTYR = (13 N MO1) P 12.

Straight-line depreciation

First year:

Last year or more: DEP = RDV

Dur 1 YM - + ---



Dsr

Rv 100 R

M

+ ------------------

1 Dsr Y

E M

-------------------

+ 

2 -----------------------------------------

E M Pri

= ⋅---------------------------------------------------------------

CST – SAL

LIF

---------------------------

CST – SAL

LIF

--------------------------- FSTYR

Sum-of-the-years’-digits depreciation

First year:

Last year or more: DEP = RDV

Declining-balance depreciation

where: RBV is for YR - 1

First year:

Unless ; then use RDV Q FSTYR

If DEP > RDV, use DEP = RDV

If computing last year, DEP = RDV

Statistics

Note: Formulas apply to both x and y.

Standard deviation with n weighting (sx):

LIF + 2 – YR – FSTYRCST – SAL 

LIF LIF + 1 2 

------------------------------------------------------------------------------------------------------

LIF CST – SAL

LIF LIF + 1 2 

------------------------------------------------------------ FSTYR

RBV DB%

LIF 100

-------------------------------

CST DB%

LIF 100

------------------------------ FSTYR

CST DB%

LIF 100

------------------------------ RDV

1 ⁄2

x2

x

2

n

– -------------------

n

----------------------------------------

Standard deviation with n-1 weighting (sx):

Mean:

Regressions

Formulas apply to all regression models using transformed data.

Interest Rate Conversions

where: x =.01 Q NOM P CˆY

where: x =.01 Q EFF

Percent Change

1 ⁄2

x2

x

2

n

– -------------------

n – 1

----------------------------------------

x

x 

n

= ---------------

b

nxy – yx

nx2x2 –

= ---------------------------------------------------------

a

y – bx

n

= ---------------------------------

r

bx

y

= --------

EFF = 100 eC ⁄Y Inx 1– 1 

NOM = 100 C ⁄Y e1 C ⁄Y In x + 1– 1 

NEW OLD 1 %CH

100

+ -------------

#PD

=

where: OLD =old value

NEW =new value

%CH =percent change

#PD =number of periods

Profit Margin

Breakeven

PFT = P Q N (FC + VC Q)

where: PFT =profit

P =price

FC =fixed cost

VC =variable cost

Q =quantity

Days between Dates

With the Date worksheet, you can enter or compute a date within the

range January 1, 1950, through December 31, 2049.

Actual/actual day-count method

Note: The method assumes the actual number of days per month and

per year.

DBD (days between dates) = number of days II - number of days I

Number of Days I= (Y1 - YB) Q 365

+ (number of days MB to M1)

+ DT1

+

Number of Days II=(Y2 - YB) Q 365

+ (number of days MB to M2)

+ DT2

+

Gross Profit Margin Selling Price – Cost

Selling Price

= ----------------------------------------------- 100

Y1 – YB

4

------------------------

Y2 – YB

4

------------------------

where: M1 =month of first date

DT1 =day of first date

Y1 =year of first date

M2 =month of second date

DT2 =day of second date

Y2 =year of second date

MB =base month (January)

DB =base day (1)

YB =base year (first year after leap year)

30/360 day-count method3

Note: The method assumes 30 days per month and 360 days per year.

where: M1 =month of first date

DT1 =day of first date

Y1 =year of first date

M2 =month of second date

DT2 =day of second date

Y2 =year of second date

Note: If DT1 is 31, change DT1 to 30. If DT2 is 31 and DT1 is 30 or 31,

change DT2 to 30; otherwise, leave it at 31.

3. Source for 30/360 day-count method formula: Lynch, John J., Jr., and Jan H. Mayle.

Standard Securities Calculation Methods. New York: Securities Industry Association,

1986

DBD = Y2 – Y1 360 + M2 + M1 30 + DT2 – DT1 

Error Messages

Note: To clear an error message, press P.