HP HP12C hp 12c_user's guide_English_E_HDPMBF12E44.pdf - Page 127

Section 12: Real Estate and Lending 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 $2000. If the lender is willing to discount the future payments at 9%, how much would the borrower need to prepay the note? Keystrokes g fCLEARG 72n 9gC 137.17P* 2000M$ Display 72.00 0.75 137.17 -8,777.61 Months (into n). Discount rate (into i). Monthly payments (into PMT). Amount necessary to prepay the note. Example 2: A 91/2% mortgage with 26 years remaining and a remaining balance of $49,350 is available for purchase. Determine the price to pay for this mortgage if the desired yield is 12%. (Since the payment amount is not given, it must be calculated.) Keystrokes g fCLEARG 26gA 9.5gC 49350Þ$P 12gC $ Display 312.00 0.79 Months (into n). Percent monthly interest rate (into i). 427.17 Monthly payment to be received (calculated). 1.00 Desired monthly interest rate (into i). -40,801.57 Purchase price to achieve the desired yield (calculated). * 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 Page: 127 of 209 Dimension: 14.8 cm x 21 cm