HP HP12C hp 12c_user's guide_English_E_HDPMBF12E44.pdf - Page 130

130 Section 12: Real Estate and Lending The Rent or Buy Decision The question of whether to rent or purchase a residence is not always easy to answer, especially when the time period over which you would own or rent a house is short. This program performs an analysis which could be helpful in reaching a decision. Essentially, it calculates a yield or rate of return on the proposed investment. This yield may be compared with the yield obtained by renting a residence and investing the down payment and monthly payment differences in a savings account or other investment opportunity. This program takes into account the tax advantages obtained by a home owner on property taxes and mortgage interest. First the program computes the Net Cash Proceeds upon Resale (NCPR),* next the yield on the investment in the house and then the value of the hypothetical savings account at the end of the investment period. A comparison of the NCPR and the final balance of the savings account and a comparison of the yields should aid in determining whether to rent or buy. KEYSTROKES DISPLAY KEYSTROKES DISPLAY fs fCLEARÎ 00- M 01- M† 02- :7 03- b 04- - 05- :n 06- ?0 07- :$ 08- fCLEARG 09- M t 15 d 15 :n 45 7 z 25 :4 30 45 11 :.0 44 0 b 45 13 :P 42 34 :4 33- 15 34- 31 35- 33 36- 45 11 37- 10 38- 45 4 39- 30 40-45 48 0 41- 25 42- 45 14 43- 45 4 * The Net Cash Proceeds upon Resale (NCPR = sales price - commission - mortgage balance), is the pre-tax proceeds. The program assumes that the buyer reinvests in like property and is not subject to capital gains tax. † FV is repeated in the program twice to ensure that it is computed and not stored. File name: hp 12c_user's guide_English_HDPMBF12E44 Printered Date: 2005/7/29 Page: 130 of 209 Dimension: 14.8 cm x 21 cm