Deferred Annuities - HP 0012C-90001 User Manual

134 Section 12: 134 Section 12: Real Estate and Lending Real Estate and Lending
134 134 Section 12: Section 12: Real Estate and Lending Real Estate and Lending
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4w
10¼
70000$
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By purchasing a house, you would gain $10,858.08 (32,391.87 – 21,533.79)
over an alternate investment at 6.25% interest.

Deferred Annuities

Deferred Annuities
Deferred Annuities Deferred Annuities
Sometimes transactions are established where payments do not begin for a
specified number of periods; the payments are deferred. The technique for
NPV
calculating may be applied assuming zero for the first cash flow. Refer to
pages 58 through 62.
Example 1: You have just inherited $20,000 and wish to put some of it aside for Example 1:
Example 1: Example 1:
your daughter's college education. You estimate that when she is of college age, 9
years from now, she will need $7,000 at the beginning of each year for 4 years
for college tuition and expenses. You wish to establish a fund which earns 6%
annually. How much do you need to deposit in the fund today to meet your
daughter's educational expenses ?
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Display Display
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4.00 Years in investment.
10.00 Yearly appreciation rate.
70,000.00 House price.
32,391.87 NCPR (calculated).
19.56 Yield.
21,533.79 Balance in savings.
Display Display Display Display
0.00
Initialize.
0.00
First cash flow.
0.00
Second through ninth cash flows.
8.00
7,000.00
Tenth through thirteenth cash flows.
4.00
6.00
Interest.
15,218.35
NPV.