Annual Percentage Rate For A Loan With Fees - HP 17bII Owner's Manual

Step 3: Enter actual, current values for N and PV ; then find new I%YR
for discounted mortgage with balloon.
Keys:
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R
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- 42
v
79000 &
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Annual Percentage Rate for a Loan with Fees

See appendix F for RPN keystrokes for the next two examples .
The annual percentage rate , APR, incorporates fees usually charged
when a mortgage is issued, which effectively raises the interest rate. The
actual amount received (the PV ) by the borrower is reduced, while the
periodic payments remain the same. The APR can be calculated given
the term of the mortgage ( N periods), the annual interest rate ( I%YR ), the
mortgage amount (new PV ), and the basis of the fee charged (how the
fee is calculated).
Remember the cash-flow sign convention: money paid out is negative,
money received is positive.
Example: APR for a Loan with Fees. A borrower is charged two points
for the issuance of a mortgage. (One point is equal to 1% of the
mortgage amount.) If the mortgage amount is $60,000 for 30 years
and the interest rate is 11½% annually with monthly payments, what
APR is the borrower paying?
File name : English-M02-1-040308(Print).doc
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14: Additional Examples 193
Print data : 2004/3/9
Description:
Stores number of
payments remaining in
5-year loan.
Stores proposed,
discounted purchase price
(new present value).
Calculates percent annual
yield.