HP 10B User Manual
Page 59
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30 WxP/YRI
360.00
Stores the length of the
mortgage (30
X
12).
0.00
Pays mortgage off in 30
years.
11.5 n/YRl
11.50
Stores interest rate.
630(S (P
m
T)
-630.00
Stores desired payment
(money paid out is
negative).
m
63,617.64
Calculates the loan you
can afford with a $630
payment.
a 12000 a
75,617.64
Adds $12,000 down
payment for the total
purchase price.
Example: A Mortgage With a Balloon Payment.
You’ve obtained
a 25 year, $72,500 mortgage at 13.8% annual interest. You anticipate (hat
you will own the house for four years and then sell it, repaying the loan
with a balloon payment. What will your balloon payment be?
Solve this problem using (wo steps:
1. Calculate (he loan payment using a 25 year term.
2. Calculate the remaining balance after 4 years.
Step 1.
First calculate the loan payment using a 25 year term.
PV » 72.500
PMT - ?
End Mode
56
5: Time Value of Money Calculationa