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Section 3: Basic Financial Functions
Example 2: A development company would like to purchase a group of
condominiums with an annual net cash flow of $17,500. The expected holding
period is 5 years, and the estimated selling price at that time is $540,000.
Calculate the maximum amount the company can pay for the condominiums in
order to realize at least a 12% annual yield.
Keystrokes
fCLEARG
5n
12¼
17500P
540000M
gÂ
$
Display
5.00
Stores n.
Stores i.
12.00
Stores PMT. Unlike in the previous
17,500.00
problem, here PMT is positive
since it represents cash received.
Stores FV.
540,000.00
Sets payment mode to End.
540,000.00
The maximum purchase price to
–369,494.09
provide a 12% annual yield. PV
is displayed with a minus sign
since it represents cash paid out.