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 - ?

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56

5: Time Value of Money Calculationa