TI BA II Plus Advanced Functions for the CFA Exam

In this tutorial

• Capital budgeting: NPV and IRR quick sequences
• Statistics: data entry, mean, variance and covariance
• Depreciation with the DEPR worksheet
• Finance leases tracked with AMORT
• Bonds: semi-annual TVM adjustments and the Bond worksheet
• Troubleshooting Error 5 and Error 7
• Advanced exam-day checklist

1. Capital budgeting: NPV and IRR in six keystrokes

Capital budgeting questions ask whether a project's future cash flows are worth the outlay today. Net present value sums the discounted flows; internal rate of return is the discount rate that makes that sum exactly zero. The decision rule is simple: accept when NPV is greater than zero, reject when it is negative, and prefer the project whose IRR clears the required return.

Start every project problem by wiping the cash flow worksheet — old data hidden in [CF] is a classic source of phantom answers.

Quick sequence:

1. Press [CF] then [2nd] then [CLR WORK].
2. CF0: enter the initial outlay as a negative number, press [ENTER].
3. C01: enter the first cash flow, press [ENTER] then [↓].
4. F01: enter how many times that flow repeats, press [ENTER] then [↓].
5. Press [NPV], enter the interest rate at I, press [ENTER] then [↓], then [CPT].
6. Press [IRR] then [CPT] for the internal rate of return.

Payback and discounted payback — liquidity measures that count how long until the investment is recovered — are only available on the BA II Plus Professional model, so check your exam-room calculator before relying on them.

Entering the same project into a free BA II Plus simulator lets you experiment with different discount rates instantly and see whether the accept/reject verdict changes — the fastest way to build intuition for the NPV rule.

2. Statistics and market returns

The statistics worksheet turns a column of historical returns into mean, sample standard deviation and variance without any formula entry.

Entering data

Use the data editor (press [2nd] then [7] to reach [DATA]) and type each observation into the X register. If a problem gives probabilities alongside returns, enter each probability as a whole number — 30 for 30% — in the Y register.

Mean, standard deviation and variance

After entering the series, press [2nd] then [STAT] and scroll to read the arithmetic mean (x̄), sample standard deviation (Sx) and population standard deviation (σx). Variance is not shown directly — a useful shortcut is to keep the standard deviation on screen and press the [x²] key to square it.

3. Covariance with memory registers

Covariance measures how two return series move together. The reliable route is to combine the two sample standard deviations with the correlation coefficient, using the memory slots:

1. Enter Stock 1 returns in X and Stock 2 returns in Y on the [DATA] screen.
2. Press [2nd] then [STAT] and confirm the mode is LIN (linear).
3. Store the three outputs: Sx → [STO] [1], Sy → [STO] [2], correlation r → [STO] [3].
4. Compute: press [RCL] [1] [×] [RCL] [2] [×] [RCL] [3] [=].

The result is the covariance — no intermediate values written down, no re-entry errors.

4. Depreciation with the DEPR worksheet

The built-in depreciation worksheet (press [2nd] then [4]) handles straight-line (SL) and double-declining-balance (DDB) methods.

• Method: press [2nd] then [SET] to toggle between SL and DB.
• Inputs: LIF useful life, CST original cost, SAL salvage value, YR the year you want to analyze.

Scroll through the outputs to read, for the chosen year: DEP (depreciation expense), RBV (reduced book value) and RDV (remaining depreciable value). Those three numbers are usually the entire answer to a fixed-asset question.

5. Finance leases with AMORT

For a finance lease, the balance sheet carries the lower of the asset's fair market value or the present value of the lease payments. After you compute that present value with TVM, the AMORT worksheet (press [2nd] then [PV]) tracks the lease over its life:

• BAL — the remaining lease liability to report.
• PRN — how much the liability was reduced in the period.
• INT — the interest expense portion of the lease payment.

Scroll between the three outputs to answer "what's the liability after year k" without rebuilding the schedule by hand. Run the same worksheet in BAII Fincal and you can replay the schedule for any lease terms until the pattern clicks.

6. Bonds: semi-annual valuation and the Bond worksheet

Semi-annual pricing with the TVM keys

Most CFA bond problems pay coupons twice a year, so every TVM input moves to a periodic basis:

• N: years to maturity × 2.
• I/Y: annual market yield ÷ 2.
• PMT: annual coupon ÷ 2.

Enter PMT and FV as positive inflows; the computed PV comes back negative, and its absolute value is the price you would pay.

Bond amortization

To see how a bond's carrying value moves toward par, use the AMORT worksheet ([2nd] then [PV]): BAL is the book value at a given period, PRN is the discount or premium amortized, and INT is the interest expense (market yield × beginning carrying value).

The dedicated Bond worksheet

When a question gives actual settlement and maturity dates, clean price and accrued interest, use the Bond worksheet (press [2nd] then [9]):

• SDT — settlement date (the day you buy the bond).
• CPN — annual coupon rate as a whole number, e.g., 8 for 8%.
• RDT — redemption (maturity) date.
• RV — redemption value, usually 100 as a percentage of par.
• Day count: toggle between ACT (actual/actual) and 360 (30/360) with [2nd] then [SET].
• Compounding: toggle between 2/Y (semi-annual) and 1/Y (annual).

Scroll to PRI and press [CPT] for the clean price, then scroll to AI for accrued interest.

Quick sequence: price and accrued interest

1. Press [2nd] then [BOND].
2. Enter SDT, CPN and RDT, pressing [ENTER] after each.
3. Confirm RV is 100.
4. Set YLD to the market rate and press [ENTER].
5. Scroll to PRI and press [CPT].
6. Scroll down to read AI (accrued interest).

Bond questions are where keystroke fluency pays off most — this exact flow is built into the tutorials in BAII Fincal, so you can drill clean-price problems against different settlement dates without burning paper.

7. Troubleshooting: Error 5 and Error 7

Error 5 — iteration limit exceeded

Error 5 appears when IRR or yield-to-maturity cannot be solved. The calculator searches iteratively and gives up after too many steps, typically because the cash flows never change sign (all inflows, so there is no rate that zeros them) or the entered rate makes the math impossible.

Fix: review the [CF] entries and make sure the initial outlay is negative. If the cash flows look correct, "seed" the calculation by entering a reasonable guess for the interest rate before computing.

Error 7 — no solution found

Error 7 is the IRR-specific cousin of Error 5. It fires when a project has no internal rate of return — the cash flow stream never crosses zero — or when the series contains multiple sign changes that produce ambiguous solutions.

Fix: re-check the signs on the [DATA] or [CF] screen and make sure inflows and outflows are entered in the correct direction.

Still wrong? The three-question checklist

• Is BGN showing? If the BGN indicator is visible in the top right, the calculator is in annuity-due mode. Press [2nd] → [BGN] → [2nd] → [SET] to return to END.
• Are there lurking cash flows? Pressing [ON/OFF] does not clear the CF or DATA worksheets. Inside the worksheet, press [2nd] then [CLR WORK].
• What is P/Y? Press [2nd] then [P/Y]. It should almost always be 1. A leftover 12 silently divides your rates and wrecks bond and equity valuations.

8. Advanced exam-day checklist

• Clear each worksheet separately. [CLR TVM] does not clear the CF, DATA or DEPR registers — use [2nd] → [CLR WORK] inside every worksheet.
• Enter percentages as whole numbers. In statistics and ICONV, type 10 for 10%, not 0.10.
• Standardize on whole numbers for returns to keep interpretations simple and avoid decimal-place errors.

9. From sequences to speed

The advanced functions reward repetition: the NPV sequence is six steps, the Bond worksheet is six inputs, and each becomes near-instant with practice. Try it in a free BA II Plus simulator and work through this tutorial's examples until you can run a full bond pricing problem without pausing. For the foundation material — decimal and AOS setup, P/Y, memory, ICONV, TVM and the BGN mode — start with the TI BA II Plus basics tutorial.

References

This tutorial was written from the public study guidance published by Kaplan Schweser, based on the CFA Video Library series hosted by Jim Maher. The key-press sequences follow the standard behavior of the Texas Instruments BA II Plus.

• Kaplan Schweser — TI BAII Plus Calculator Advanced Functions for the CFA Exam
• Kaplan Schweser — TI BAII Plus Calculator Basics for the CFA Exam