HP 12C Financial calculator - Manual (Page 127)

Section 12: Real Estate and Lending 127
File name: hp 12c_user's guide_English_HDPMBF12E44 Page: 127 of 209
Printered Date: 2005/7/29 Dimension: 14.8 cm x 21 cm
Example 1: A lender wishes to induce the borrower to prepay a low interest rate
loan. The interest rate is 5% with 72 payments remaining of $137.17 and a
balloon payment at the end of the sixth year of $2000. If the lender is willing to
discount the future payments at 9%, how much would the borrower need to prepay
the note?
Keystrokes Display
gÂ
fCLEARG
72n
72.00
Months (into n).
9gC 0.75 Discount rate (into i).
137.17P *
137.17 Monthly payments (into PMT).
2000M$ –8,777.61 Amount necessary to prepay the
note.
Example 2: A 9 1 /
2
% mortgage with 26 years remaining and a remaining
balance of $49,350 is available for purchase. Determine the price to pay for this
mortgage if the desired yield is 12%. (Since the payment amount is not given, it
must be calculated.)
Keystrokes Display
gÂ
fCLEARG
26gA
312.00
Months (into n).
9.5gC 0.79 Percent monthly interest rate (into i).
49350Þ$P 427.17 Monthly payment to be received
(calculated).
12gC 1.00 Desired monthly interest rate (into i).
$ –40,801.57 Purchase price to achieve the
desired yield (calculated).
* Note that the payments are positive because this problem in seen from the viewpoint of the
lender who will be receiving payments. The negative PV indicates money that was lent out.