HP 12c Solutions Handbook page 151

Real Estate
Wrap-Around Mortgage
• n = number of years remaining in original mortgage.
1
• PMT = yearly payment of original mortgage.
1
• PV = remaining balance of original mortgage.
1
• n = number of years in wrap-around mortgage.
2
• PMT = yearly payment of wrap-around mortgage.
2
• r = interest rate of wrap-around mortgage as a decimal.
• FV = balloon payment.
•
PV PV =
–
2 1
After-Tax Cash Flows
• ATCF = After-Tax Cash Flow for kth year.
k
• Int = interest for kth year.
k
• Dep = depreciation for kth year.
k
• r = appropriate tax rate.
• NOI = Net Operating Income.
• ATCF = NOI (1 - r) - 12 x PMT + r x (Int
k
After-Tax Net Cash Proceeds of Resale
• CO = capital purchase.
• CPR = sales price - closing costs.
• r = marginal tax rate.
• NCPR = CPR - remaining balance of mortgage.
• ATNCPR = NCPR + r x [(.6 SL Dep. - Total Dep) + .4 x (CO - CPR)]
Appendix
–
PMT 1 – 1 + r
2
------------------------------------------------------ -
r
n2
PMT 1 – 1
1
------------------------------------------------------ -
–
r
+ Dep
k
150
– n1
+ r
+ FV 1 +
).
k
– n2
r