HP 12C User Manual page 168

168 Section 12: Real Estate and Lending
Example: You are being transferred for 4 years to a distant city and are faced
with the decision of whether to rent or to buy a house. A quick survey of the
housing market indicates that you can purchase an acceptable house for
$270,000 with a $7,000 down payment on a 30-year mortgage at 6% interest.
The closing costs would be about $3,700. Selling costs include a 6% commission
for resale and miscellaneous other fees that amount to another 2% of the sale price.
Housing in the area is appreciating 5% per year. Property taxes would be about
$300 per month, and you estimate that maintenance would cost an additional
$165 per month.
An alternative would be to rent a similar dwelling at $900 per month and to invest
the difference between the purchase cost and rent at 3% interest. Your personal
income tax rate (marginal) is 25% Federal and 5% State. Which alternative is
more financially attractive ?
Keystrokes
(RPN mode)
f]
gÂ
fCLEARH
7000?1
30?2
6?3
300?4
165?5
3700?6
8?7
900?8
3?9
30?.0
fCLEARG
4n
5¼
270000$
t
File name: hp 12c pt_user's guide_English_HDPMF123E27
Printed Date: 2005/8/1
Keystrokes
Display
(ALG mode)
f[
gÂ
fCLEARH 0.00
7,000.00
7000?1
30.00
30?2
6.00
6?3
300.00
300?4
165.00
165?5
3,700.00
3700?6
8.00
8?7
900.00
900?8
3.00
3?9
30.00
30?.0
fCLEARG 30.00
4.00
4n
5.00
5¼
270,000.00
270000$
t
53,095.65
Page: 168 of 275
Dimension: 14.8 cm x 21 cm
Down payment.
Life of mortgage.
Interest rate.
Property taxes.
Monthly expenses.
Closing costs.
Resale costs (as a
percentage).
Rent.
Savings interest rate.
Tax bracket.
Clear financial registers.
Years in investment.
Yearly appreciation rate.
House price.
NCPR (calculated).