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Hello,

I am trying to identify an error which I received on my 20b. I entered a non-conventional cash flow, with a single change of sign, and when IRR was pressed, I received the message: "ON [right-arrow] Stop." Interestingly, I've entered non-conventional cash flows (with sign changes) before and the 20b usually returns the first IRR. Does anyone know what this error message is as could not find it in my 20b manual. Thanks for your kind help!

hello,

Quote:
I am trying to identify an error which I received on my 20b. I entered a non-conventional cash flow, with a single change of sign, and when IRR was pressed, I received the message: "ON [right-arrow] Stop."

Does anyone know what this error message is as could not find it in my 20b manual. Thanks for your kind help!


Yes, I know what that means :-)

the ON->STOP message appears each time you perform a 'long' iterative calculation such as a TVM I, BOND YTM, ICONV P/YR or IRR calculation and the algorithm loops more than 20 times.

since in most cases the algorythm will find the solution faster than that, you will not see this message. However, in some 'strange' cases, the algorythm will take a LONG time to find a solution if ever. The ON key can then be used to 'stop'/'cancel' the calculation. This error message (ON->STOP) is here in order to: 1 tell you that the algorythm is still looking for an answer and 2: remind you that you can cancel the calculation if no solution seems to be found.

now, I am interested in knowing what values you used for the cash flow in order to see if it's normal for the algorythm not to find a solution, or if there is something wrong with it.

regards, cyrille

Thank you for your advice Cyrille. The values for cash flow I entered were:

CF(0) = -2,000

#CF(0) = 1

CF(1) = 6,000

#CF(1) = 1

CF(2) = -5,000

#CF(2) = 1

Edited: 26 Sept 2008, 2:43 p.m.

Cinealta,

being curious about solving this on other calculators, I used my trusted 200LX (an HP19bII should work as well) and plotted the NPV to IRR plot with the numbers you supplied.

As already guessed - it never crosses the X-axis - so no IRR% solution is possible, because of the definition of IRR, "being the rate, which discounts all cashflows to an NPV of zero".

You should stay away from such "investments", which require you to anticipate such huge "scrap" outflows, compared to earlier inflows ;-))

- or use MIRR or FMRR (with addditional LIQUID- or RISK-rates) instead.

Which gives me a chance to kindly ask our always helpful HP Product Manager - Cyrille - to contemplate implementing MIRR/FMRR algorithms into a new incarnation of HP17/19 firmware if budget and resources allow.

Best regards

Peter A. Gebhardt

Thank you for your advice Peter. Yes, I am sorry. It was a problem which my Finance professor assigned. I did not graph it to realize it does not cross X-axis, so no solution possible. Thanks again!

hello,

Quote:
- or use MIRR or FMRR (with addditional LIQUID- or RISK-rates) instead.

Well, MIRR would not help as it requires a correct value for IRR to be used for the outflow cashs...

Quote:
Which gives me a chance to kindly ask our always helpful HP Product Manager - Cyrille - to contemplate implementing MIRR/FMRR algorithms into a new incarnation of HP17/19 firmware if budget and resources allow.

FMRR would work, but my understanding was that FMRR was not really used anymore... can you tell me more about it (after all, I am a scientist, not a business guy).

regards, cyrille

Cyrille,

see your inbox.

Best regards

Peter A. Gebhardt