HP 113394 User Guide - Page 170

170 Section 12: Real Estate and Lending In the example cited, the rental payment stream for months 7 through 24 are "deferred annuities," as they start at some time in the future. The cash flow diagram from the investor's viewpoint looks like this: To find today's present value of the cash flows assuming a desired yield, the NPV technique may be used. (Refer to pages 73 through 77.) Example 2: A 2-year lease calls for monthly payments (at the beginning of the month) of $500 per month for the first 6 months, $600 per month for the next 12 months, and $750 per month for the last 6 months. If you wish to earn 13.5% annually on these cash flows, how much should you invest (what is the present value of the lease)? Keystrokes (RPN mode) f] fCLEARH 500gJ gK 5ga 600gK 12ga 750gK 6ga 13.5gC fl Keystrokes (ALG mode) f[ fCLEARH 500gJ gK 5ga 600gK 12ga 750gK 6ga 13.5gC fl Display 0.00 500.00 500.00 5.00 600.00 12.00 750.00 6.00 1.13 12,831.75 Initialize. First cash flow. Second through sixth cash flows. Next twelve cash flows. Last six cash flows. Monthly interest rate. Amount to invest to achieve a 13.5% yield. File name: hp 12c pt_user's guide_English_HDPMF123E27 Page: 170 of 275 Printed Date: 2005/8/1 Dimension: 14.8 cm x 21 cm