Deduct Allowance for Vacancy and Rental Loss. This is usually expressed as a percentage. Add "Other Income" such as receipts from concessions laundry equipment, etc.
This is Effective Gross Income. Deduct Operating Expenses. These are expenditures the landlord-investor must make, by contract or custom, to preserve the property and keep in capable of producing the gross income. The result is the Net Operating Income. Deduct Annual Debt Service on the mortgage. This produces Cash Throw-Off to Equity. What is the Effective Gross Income? What is the Net Operating Income? What is the Cash Throw-Off to Equity? The reversion receivable at the end of the income projection period is usually based on forecast or anticipated resale of the property at that time.
The before tax reversion amount applicable to real estate analysis and problems are:. Forecast or estimate Sales Price. Deduct sales and Transaction Costs. The result is the Proceeds of Resale.
The result is Net Cash Proceeds of Resale. Example: The apartment property in the preceding example is expected to be resold in 10 years. The mortgage is the same as that indicated in the preceding example. The Net Operating. The user is able to change the method of finding the depreciation from declining balance to straight line. To make the change, key in fV at line ALG: of the program in place of f. Key in Operational cost and press? Key in depreciable value and press?
Key in depreciable life and press? Key in factor for declining balance only and press? Key in the Marginal Tax Rate as a percentage and press?
Key in the growth rate in Potential Gross Income 0 for no growth and press? Key in the growth rate in operational cost 0 if no growth and press? Key in the vacancy rate 0 for no vacancy rate and press?. RPN: Key in the desired depreciation function at line in the program. ALG: Key in the desired depreciation function at line in the program.
Press t to compute ATCF. The display will pause showing the year and then will stop with the ATCF for that year. The Y-register contains the year. Continue pressing t to compute successive After-Tax Cash Flows. Straight line depreciation will be used. The terms of the loan are 9. This program uses declining balance depreciation to find the amount of depreciation from purchase to sale.
This amount is used to determine the excess depreciation which is equal to the amount of actual depreciation minus the amount of the straight line depreciation. The user may change to a different depreciation method by keying in the desired function at line ALG: in place of f. In addition the user may nullify the straight line depreciation by keying in a 0 at line ALG: in place of fV.
This means that all of the actual depreciation from purchase to sale is then treated as "excess" or unrecaptured depreciation. This is illustrated below in Example 2. R 0 : NCPR. If any of the values are unknown, they should be solved for and if one has to be solved for then the correct payment mode needs to be set. Key in depreciable life in years and press?
Key in accelerated depreciation factor for the declining balance method and press? Key in your Marginal Tax Rate as a percentage and press? Key in the Capital Gains Tax Rate as a percentage and press?
Key in the number of years after purchase and press t. To see the NCPR press : 0 and to see the tax due press : 1. First the fV in the program must be replaced with 0. This may be done as follows:. RPN: Press g fs 0 fs. ALG: Press g fs 0 fs. The data stored in registers R 3 -R 5 need not be re-entered. This type of loan is structured such that the principal is repaid in equal installments with the interest paid in addition.
Therefore each periodic payment has a constant amount applied toward the principle and a varying amount of interest. If the constant periodic payment to principal, annual interest rate, and loan amount are known, the total payment, interest portion of each payment, and remaining balance after each successive payment may be calculated as follows:.
Key in the constant periodic payment to principal and press? Key in the loan amount. Press O: 0 - to obtain the remaining balance of the loan. Return to step 4 for each successive payment. Key in the loan amount and press?
Key in periodic interest rate and press? Press : 0? Press : 1 to obtain the remaining balance of the loan. What is the loan reduction schedule for the first year? What is the fourth year's schedule skip 4 payments? An add-on interest rate determines what portion of the principal will be added on for repayment of a loan.
This sum is then divided by the number of months in a loan to determine the monthly payment. This keystroke procedure converts an add-on interest rate to a annual percentage rate when the add-on rate and number of months are known.
Given the number of months and annual percentage rate, this procedure calculates the corresponding add-on interest rate. Enter the following information:. Key in number of months of loan and press n. Key in APR and press gC. This HP 12C Platinum program calculates the monthly payment amount, credit life amount an optional insurance which cancels any remaining indebtedness at the death of the borrower , total finance charge, and annual percentage rate APR for an add-on interest rate AIR loan.
The monthly payment is rounded in normal manner to the nearest cent. If other rounding techniques are used, slightly different results may occur. Key in the number of monthly payments in the loan and press? Key in the annual add-on interest rate as a percentage and press?
Key in the credit life as a percentage and press? Press t to find the monthly payment amount. Press t to obtain the amount of credit life. Press t to calculate the total finance charge. Press t to calculate the annual percentage rate. For a new loan return to step 3. What are the monthly payment amount, credit life amount, total finance charge, and APR? This procedure finds the unearned interest rebate, as well as the remaining principal balance due for a prepaid consumer loan using the Rule of 78's.
The known values are the current installment number, the total number of installments for which the loan was written, and the total finance charge amount of interest. The information is entered as follows:. Key in number of months in the loan and press? Key in payment number when prepayment occurs and press -? What is the rebate and balance due after the 25th regular payment? The following HP 12C Platinum program can be used to evaluate the previous example.
Key in the total finance charge and press t to obtain the unearned interest rebate. Key in the periodic payment amount and press t to find the amount of principal outstanding. For a new case return to step 2. The Graduated Payment Mortgage is designed to meet the needs of young home buyers who currently cannot afford high mortgage payments, but who have the potential of increasing earning in the years to come. Under the Graduated Payment Mortgage plan, the payments increase by a fixed percentage at the end of each year for a specified number of years.
Thereafter, the payment amount remains constant for remaining life of the mortgage. The result is that the borrower pays a reduced payment a payment which is less than a traditional mortgage payment in the early years, and in the later years makes larger payments than he would with a traditional loan. Over the entire term of the mortgage, the borrower would pay more than he would with conventional financing. Given the term of the mortgage in years , the annual percentage rate, the loan amount, the percentage that the payments increase, and the number of years that the payments increase, the following HP 12C Platinum program determines the monthly payments and remaining balance for each year until the level payment is reached.
Key in the term of the loan and press n. Key in the number of years for which the loan graduates and press t. The following information will be displayed for each year until a level payment is reached. The monthly payment for the current year. Then press t to continue. The remaining balance to be paid on the loan at the end of the current year. Then press t to return to step a. If the level payment has been reached, the program will stop, displaying the monthly payment over the remaining term of the loan.
For a new case press g and return to step 2. Example: A young couple recently purchased a new house with a Graduated Payment Mortgage. What are the monthly payment amount for the first 6 years? As its name suggests, a variable rate mortgage is a mortgage loan which provides for adjustment of its interest rate as market interest rates change.
As a result, the current interest rate on a variable rate mortgage may differ from its origination rate i. This is the difference between a variable rate mortgage and the standard fixed payment mortgage, where the interest rate and the monthly payment are constant throughout the term.
Under the agreement of the variable rate mortgage, the mortgage is examined periodically to determine any rate adjustments. The rate adjustment may be implemented in two ways:. Adjusting the monthly payment. Modifying the term of the mortgage. Each periodic adjustment may be calculated by using the HP 12C Platinum with the following keystroke procedure.
The original terms of the mortgage are assumed to be known. The remaining balance is the difference between the loan amount and the total principal from the payments which have been made.
Key in the previous remaining balance. If this is the first mortgage adjustment, this value is the original amount of the loan.
Key in the annual interest rate before the adjustment as a percentage and press gC. Key in the number of years since the last adjustment. If this is the first mortgage adjustment, then key in the number of years since the origination of the mortgage. Press gA. Key in the adjusted annual interest rate as a percentage and press gC. To calculate the new monthly payment:. Key in the remaining life of the mortgage years and press gA.
RPN: Press P to find the new monthly payment. Key in the present monthly payment and press P. RPN: Press n 12 z to find the remaining term of the mortgage in years. When the interest rate is adjusted from If the monthly payment remained unchanged, find the revised remaining term on the mortgage. Sometimes a loan or lease may be negotiated in which a specific set of monthly payments are going to be skipped each year. Seasonally is usually the reason for such an agreement. For example, because of heavy rainfall, a bulldozer cannot be operated in Oregon during December, January, and February, and the lessee wishes to make payments only when his machinery is being used.
He will make nine payments per year, but the interest will continue to accumulate over the months in which a payment is not made. To find the monthly payment amount necessary to amortize the loan in the specified amount of time, information is entered as follows:. Key in the number of the last payment period before payments close the first time and press n. Key in the annual interest rate as a percentage and press gC 1 PM. Key in the total number of years in the loan and press n.
The first payment is due one month later, and payments will continue over a period of 5 years. Due to the weather, the machinery will not be used during the winter months, and the purchaser does not wish to make payments during January, February, and March months 4 thru 6.
Given an initial deposit into a savings account, and a series of periodic deposits coincident with the compounding period, the future value or accumulated amount may be calculated as follows:.
Key in the number of additional periodic deposits and press n. Press M to determine the value of the account at the end of the time period. Note: If the periodic deposits do not coincide with the compounding periods, the account must be evaluated in another manner. First, find the future value of the initial deposits and store it.
Then use the procedure for compounding periods different from payment periods to calculate the future value of the periodic deposits. Recall the future value of the initial deposit and add to obtain the value of the account.
Given the current value of a savings account, the periodic interest rate, the amount of the periodic withdrawal, and a specified balance, this procedure determines the number of periods to reach that balance the balance is zero if the account is depleted.
Key in the amount of the periodic withdrawal and press P. Key in the amount remaining in the account and press M. Press n to determine the number of periods to reach the desired balance. How long will this take? This section is presented as a guideline for evaluating a savings plan when deposits and withdrawals occur at irregular intervals. One problem is given, and a step by step method for setting up and solving the problem is presented:.
How much will you have accumulated in 5 months? What is the new balance? How much will you have in 3 months? The cash flow diagram looks like this:. Suppose that for 2 months you decide not to make a periodic deposit.
What is the balance in the account? This type of procedure may be continued for any length of time, and may be modified to meet the user's particular needs. This HP 12C Platinum program determines the value of a savings account when interest is compounded daily, based on a day year. The user is able to calculate the total amount remaining in the account after a series of transactions on specified dates.
Key in the date MM. Key in the amount of the initial deposit and press t. Key in the amount of the transaction positive for money deposited, negative for cash withdrawn and press t to determine the amount in the account. Repeat steps 6 and 7 for subsequent transactions. To see the total interest to date, press : 3.
For a new case press f and go to step 2. Example: Compute the amount remaining in this 5. In financial calculations involving a series of payments equally spaced in time with periodic compounding, both periods of time are normally equal and coincident. This assumption is preprogrammed into the HP 12C Platinum. In savings plans however, money may become available for deposit or investment at a frequency different from the compounding frequencies offered.
The HP 12C Platinum can easily be used in these calculations. However, because of the assumptions mentioned the periodic interest rate must be adjusted to correspond to an equivalent rate for the payment period. Payments deposited for a partial compounding period will accrue simple interest for the remainder of the compounding period. This is often the case, but may not be true for all institutions.
These procedures present solutions for future value, payment amount, and number of payments. In addition, it should be noted that only annuity due payments at the beginning of payment period calculations are shown since this is the most common in savings plan calculations. See your browser's documentation for specific instructions. HP Customer Support. Select your model. How does HP install software and gather data?
Apache Log4j Update Please see this document here for current information regarding the Apache Log4j vulnerability. Need Windows 11 help? Loan calculations. Cash flow diagrams and sign conventions. Loan calculations A loan is an agreement between two parties where one party borrows money and agrees to pay back to the other party often a financial institution over a set period of time with interest. The amount of money that is borrowed is called the principal and the interest is the payment for borrowing the money.
The time set to pay back the loan is known as the term. Loan calculations are annuity problems involving TVM time value of money calculations involving the concepts of the present value of money PV , future value of money FV , periodic payments PMT , interest rates i , and number of periods n.
To set any of these registers to a known value, calculate or key it in and press the corresponding key. Enter each of the four known TVM values, press its related key, then press the key that represents the unknown, fifth value to calculate it.
There are also two functions meant to be an aid when entering or retrieving annual values for and : and. Pressing is the same as pressing , meaning the number of years can be keyed in and stored as number of months automatically.
Pressing is the same as pressing , meaning the yearly interest rate can be keyed in and stored as monthly interest rate automatically. Cash flow diagrams and sign conventions The sign conventions for cash flows in the HP 12c follow this simple rule: money received is positive arrow pointing up , money paid out is negative arrow pointing down. The key is keeping the same viewpoint through each complete calculation.
The regular use of cash flow diagrams allows a faster approach to solve most TVM-related problems. The cash flow diagram below represents the borrower viewpoint of the most common mortgage problems with balloon payment and their relation to the TVM variables. Figure : Cash flow diagram. Practice solving loan problems Example 1 To help sell used cars, a car dealer offers loans with a Solution Set the known values and calculate the PMT:. Figure : Calculating the monthly payment. What is the amount of money that will remain from this loan after two years?
Solution Since the previous data is still stored in the calculator, let us set only the new values and calculate the FV:. Example 3 The same car dealer in previous example sells new cars as well, and offers loans with a How many payments must be made to pay off the loan?
Solution Set the known values and calculate n:. Figure : Calculating the number of monthly payments. Answer It would require 29 monthly payments to pay for the new car.
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