HP 12c User Manual page 127

Example 1: A lender wishes to induce the borrower to prepay a low interest rate
loan. The interest rate is 5% with 72 payments remaining of $137.17 and a
balloon payment at the end of the sixth year of $2000. If the lender is willing to
discount the future payments at 9%, how much would the borrower need to prepay
the note ?
Keystrokes
gÂ
fCLEARG
72n
9gC
137.17P
2000M$
Example 2: A 9
balance of $49,350 is available for purchase. Determine the price to pay for this
mortgage if the desired yield is 12%. (Since the payment amount is not given, it
must be calculated.)
Keystrokes
gÂ
fCLEARG
26gA
9.5gC
49350Þ$P
12gC
$
*
Note that the payments are positive because this problem in seen from the viewpoint of the
lender who will be receiving payments. The negative PV indicates money that was lent out.
File name: hp 12c_user's guide_English_HDPMBF12E44
Printered Date: 2005/7/29
Section 12: Real Estate and Lending
Display
72.00
0.75
137.17
*
–8,777.61
1
/ % mortgage with 26 years remaining and a remaining
2
Display
312.00
0.79
427.17
1.00
–40,801.57
Page: 127 of 209
Dimension: 14.8 cm x 21 cm
Months (into n).
Discount rate (into i).
Monthly payments (into PMT).
Amount necessary to prepay the
note.
Months (into n).
Percent monthly interest rate (into i).
Monthly payment to be received
(calculated).
Desired monthly interest rate (into i).
Purchase price to achieve the
desired yield (calculated).
127