Sharp EL733A EL-733A Operation Manual - Page 30

PAYMENTS

IN

BGN

MODE

BGN

mode

was

mentioned

briefly

on

page

48.

To

put

the

EL

-733A

in

BGN

mode,

press

the

!MN)

key.

An

indicator

should

come

on

in

the

display

to

tell

you

the

calculator

is

set

to

BGN

mode.

BGN

is

short

for

BEGIN.

When

set

to

BGN

mode,

the

calculator

assumes

that

payments

(

FM

)

in

TVM

problems

occur

at

the

beginning

of

the

period

rather

than

at

the

end.

BGN

mode

only

affects

the

TVM

functions

and

does

not

have

any

affect

on

the

Discounted

Cash

-Flow

Analysis

functions

(

CFl

,

2ntl

D,frvvj

,

and

62

).

Payments

at

the

beginning

of

the

period

are

sometimes

called

"payments

in

advance"

or

"annuity

in

advance."

Payments

at

the

end

of

the

period

are

sometimes

called

"payments

in

arrears"

or

"annuity

in

arrears."

LEASES

In

leases

of

property

or

equipment,

it

is

common

to

have

the

payments

at

the

beginning

of

the

period.

A

lease

consists

of

a

loan

of

something

of

material

value

in

exchange

for

periodic

payments.

You

can

lease

a

car,

or

you

can

lease

equipment

for

your

business,

or

you

can

lease

a

house

or

any

real

property.

Lease

contracts

can

vary

considerably

depending

on

what

is

being

leased

and

on

the

intentions

of

the

parties

involved

in

the

lease.

Many

leases

of

cars

or

equipment

are

written

as

purchase

agreements:

a

fancy

form

of

financing.

Leases

of

property

and

buildings

tend

to

be

written

more

as

rent/time

agreements;

one

party

agrees

to

make

monthly

payments

on

a

property

for

a

certain

amount

of

time

and

the

other

party

agrees

to

let

them

stay

at

that

property

for

that

amount

of

time.

Leases

that

require

payments

up

front

(for

example,

the

last

three

payments

up

front

or

the

first

year's

payments

up

front),

or

that

have

some

other

alterations

to

the

steady,

even

payment

stream

may

require

some

fi

nagling

before

they

can

be

solved

using

the

TVM

functions.

Leases

that

get

overly

complex

often

must

be

tamed

by

using

the

Discounted

Cash

-Flow

Analysis

functions.

An

example

of

a

straightforward

lease

appears

below

and

an

example

of

a

more

complicated

lease

appears

on

page

85.

To

solve

this

example,

yourEL-733A

must

be

set

to

BGN

mode

(the

BGN

indicator

is

on

in

the

display).

To

set

the

display

to

show

dollars

and

cents,

press

(2nd

El

Example:

As

the

president

of

a

start-up

company

specializing

in

solar

-powered

water

pumps

that

take

advantage

of

the

properties

of

the

newly

developed

"thermo-memory

metals,"

you

have

brought

considerable

success

to

the

firm.

A

move

to

larger

facilities

is

the

next

necessary

step,

and

you

are

negotiating

a

fi

ve-year

lease

on

a

prospective

building.

The

building

you

would

like

to

lease

is

valued

at

$775'000.00,

and

it's

in

an

area

that

will

allow

for

good

growth,

so

you

are

negotiating

an

option

to

buy

at

the

end

of

the

lease.

After

weeks

of

negotiation,

you

and

the

owner

settle

on

a

buyout

price

of

$700'000.00.

The

owner

wants

to

see

about

a

12%

yield

on

the

value

of

the

building

during

the

fi

ve-year

lease.

What

are

your

monthly

payments?

Sharp EL733A EL-733A Operation Manual - Page 30

Sharp EL733A Manual

Page 30 highlights