HP 39GS hp 39gs_user's guide_English_E_HDPMG39AE13.pdf - Page 149

Example 1 - Loan calculations Suppose you finance the purchase of a car with a 5-year loan at 5.5% annual interest, compounded monthly. The purchase price of the car is $19,500, and the down payment is $3,000. What are the required monthly payments? What is the largest loan you can afford if your maximum monthly payment is $300? Assume that the payments start at the end of the first period. Solution. The following cash flow diagram illustrates the loan calculations: PV = $16,500 FV = 0 l%YR = 5.5 N = 5 x 12 = 60 P/YR = 12; End mode 12 PMT = ? 59 60 Start the Finance Solver, selecting P/YR = 12 and End payment option. • Enter the known TVM variables as shown in the diagram above. Your input form should look as follows: • Highlighting the PMT field, press the soft menu key to obtain a payment of -315.17 (i.e., PMT = -$315.17). • To determine the maximum loan possible if the monthly payments are only $300, type the value -300 in the PMT field, highlight the PV field, and press the soft menu key. The resulting value is PV = $15,705.85. Using the Finance Solver 12-5