HP 113394 User Guide - Page 58

58 Section 3: Basic Financial Functions Example 2: A development company would like to purchase a group of condominiums with an annual net cash flow of $17,500. The expected holding period is 5 years, and the estimated selling price at that time is $540,000. Calculate the maximum amount the company can pay for the condominiums in order to realize at least a 12% annual yield. Keystrokes fCLEARG 5n 12¼ 17500P 540000M g $ Display 5.00 12.00 17,500.00 540,000.00 540,000.00 -369,494.09 Stores n. Stores i. Stores PMT. Unlike in the previous problem, here PMT is positive since it represents cash received. Stores FV. Sets payment mode to End. The maximum purchase price to provide a 12% annual yield. PV is displayed with a minus sign since it represents cash paid out. Calculating the Payment Amount 1. Press fCLEARG to clear the financial registers. 2. Enter the number of payments or periods, using n or gA. 3. Enter the periodic interest rate, using ¼ or gC. 4. Enter either or both of the following: z Present value, using $. z Future value, using M. Note: Remember to observe the cash flow sign convention. File name: hp 12c pt_user's guide_English_HDPMF123E27 Page: 58 of 275 Printed Date: 2005/8/1 Dimension: 14.8 cm x 21 cm