Example 3: Property values in an unattractive area are depreciating at the rate
of 2% per year. Assuming this trend continues, calculate the value in 6 years of
property presently appraised at $32,000.
The cash flow diagrams and examples presented so far have dealt with financial
transactions in which interest begins to accrue at the beginning of the first regular
payment period. However, interest often begins to accrue prior to the beginning of
the first regular payment period. The period from the date interest begins accruing
to the date of the first payment, being not equal to the regular payment periods is
sometimes referred to as an "odd first period". For simplicity, in using the hp 12c
platinum we will always regard the first period as equal to the remaining periods,
and we will refer to the period between the date interest begins accruing and the
beginning of the first payment period as simply the "odd period" or the "odd
days". (Note that the odd period is always assumed by the calculator to occur
before the first full payment period.) The following two cash flow diagrams
represent transactions including an odd period for payments in advance (Begin)
and for payments in arrears (End).
Section 3: Basic Financial Functions
Stores i (with minus sign for a
"negative interest rate").
Stores PV (with minus sign for cash
Property value after 6 years.