Texas Instruments Ba Ii Plus

Using the Texas Instruments BA II Plus Without Losing Your Mind

I've been using the Texas Instruments BA II Plus for roughly fifteen years now, mostly because it's the only calculator allowed on the CFA Level 1 exam. The exam board picked it, so you use it. That's really the origin story. It isn't particularly elegant, but it gets the job done and it has a battery that lasts about a decade. Here's how you actually set it up before doing anything else. Hit 2ND then BGN to check whether your calculator is in BEGIN mode or END mode. Most time value of money problems assume END mode, which is the default. If you're doing annuity due work, flip it to BEGIN. Then press 2ND then QUIT to get back to the main screen. Also hit 2ND P/Y and set P/Y to 1. By default the calculator thinks payments happen monthly, which will wreck your annual calculations if you don't catch it. Set Y/365 to zero if you want decimal day counting rather than the 30/360 bond convention they use in some markets.

Basic TVM Operations on Texas Instruments BA II Plus

The five TVM keys are N, I/Y, PV, PMT, and FV. You fill in four and compute the fifth. Here's a realistic example I actually use at work: a loan at 6.5 percent annual interest, 48 months, borrowing $25,000. You want the monthly payment. Enter 48 into N. Enter 6.5 into I/Y. Enter 25000 into PV. Enter 0 into FV. Then press CPT then PMT. The result shows as negative because the calculator follows cash flow sign convention, meaning money going out is negative and money coming in is positive. The payment should be roughly negative 589. This is important: always make sure PV and PMT have opposite signs. If they show the same sign, something is wrong with your setup. Amortization is where people get stuck. Press 2ND then AMORT. Set P1 to 1 and P2 to 12 if you want the first year. Hit = to see BAL, which is the remaining balance, then to see PRN, the principal paid, then again for INT, the interest portion. Do not try to do this by hand with the TVM keys. It will take twenty minutes and you'll make a sign error somewhere. The cash flow worksheet, accessed via CF, is essential for NPV and IRR work. Enter your initial outlay as CF0, usually negative. Then enter C01, C02, and so on for each period's cash flow. After entering all flows, press NPV, enter your discount rate into I, then press CPT. For IRR, just press IRR then CPT after entering all cash flows. One thing the manual doesn't warn you about: if your cash flows have unconventional patterns, like sign changes more than once, the calculator might return an error or a misleading IRR. In those cases, graph the NPV function or use a spreadsheet. The BA II Plus cannot handle multiple IRRs gracefully.

I ran into a specific problem last year that took me about forty minutes to track down. I was pricing a bond with semiannual coupons at 5.25 percent. The yield was 4.8 percent with 7 years remaining to maturity. I entered N as 14, I/Y as 4.8, PMT as 26.25, FV as 1000, and computed PV. The answer was wrong by about $12. I stared at it for a while, checked my signs, re-entered everything. Still wrong. Then I noticed the P/Y setting was still at 12 from some previous time value of money calculation I'd done for a monthly mortgage amortization. I set P/Y back to 2 for semiannual and the price came out correctly around 1,028. The lesson is that P/Y and the TVM keys interact in a way that trips people up constantly. When you switch between monthly annuities and semiannual bond calculations, you have to remember to reset P/Y each time. Alternatively, keep P/Y at 1 and manually adjust N and I/Y yourself, which is actually safer if you're careful about what you're entering. For statistical work, press 2ND then DATA. Enter your X values and Y values in the columns provided. After filling them in, press 2ND then STAT. You'll see n, x-bar, Sx, sigma x, y-bar, Syy, and various regression coefficients depending on what you calculated. This is useful for quick regression analysis when you don't have Excel open. The correlation coefficient r and the coefficient of determination R-squared are buried in there. Don't expect to do multivariate regression on this thing. It does simple linear regression and that's it. One counter-intuitive thing about the Texas Instruments BA II Plus: the 2ND CLR WORK command only clears the current worksheet, not the TVM registers. The 2ND CLR TVM command is separate. I've lost count of the number of practice problems I've gotten wrong because I thought clearing one cleared the other. Set a habit of pressing 2ND CLR TVM before every new TVM problem. It adds two seconds to your workflow and prevents a whole class of stupid errors.

The calculator also has a breakeven function under 2ND BREAKEVEN. This is genuinely useful if you're comparing two projects and need to find the discount rate where their NPVs intersect. Enter the cash flows for Project A, then Project B, and it computes the crossover rate directly. I use this maybe twice a year, but when I need it, it saves me from setting up a spreadsheet. There are real limitations you should know about. The display only shows ten digits. If you're working with large notional amounts or tiny percentages, you'll lose precision. The internal memory holds results but the chaining behavior is inconsistent. Sometimes it remembers the previous answer, sometimes it doesn't. Don't trust it to carry forward intermediate values across different worksheet types. The BA II Plus Professional adds a few more features like depreciation schedules and breaking changes, but the core limitations are the same. If you need heavy computational work, use a proper financial calculator like the HP 12C or just use Excel. The BA II Plus is a tool for passing exams and doing quick back-of-the-envelope calculations, not for building financial models. Battery replacement is straightforward but easy to forget. The calculator uses a CR2032 coin cell. When the display starts fading, which usually happens after three to five years depending on usage, replace it. A fresh battery costs about two dollars. Do not ignore a dim display. Reading poorly lit numbers during an exam is a fast track to miskeying inputs.

If you're preparing for the CFA or FRM exams, get comfortable with this calculator before test day. I know people who wait until the week of the exam to practice, and they waste hours fighting with the interface instead of studying the material. The Texas Instruments BA II Plus does exactly what it needs to do. It's not refined. It has quirks that will bite you if you're careless. But it's reliable, it's approved for every major finance exam, and with a few good habits it won't slow you down.