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File name: hp 12c_user's guide_English_HDPMBF12E44 Page: 124 of 209
Printered Date: 2005/7/29 Dimension: 14.8 cm x 21 cm
Section 12
Real Estate and Lending
Annual Percentage Rate Calculations With Fees
Borrowers are usually charged fees in connection with the issuance of a mortgage,
which effectively raises the interest rate. The actual amount received by the
borrower (PV) is reduced, while the periodic payments remain the same. Given the
life or term of the mortgage, the interest rate, the mortgage amount, and the basis
of the fee charge (how the fee is calculated), the true Annual Percentage Rate (APR)
may be calculated. Information is entered as follows:
1. Press g and fCLEARG.
2. Calculate and enter the periodic payment amount of the loan.
a. Key in the total number of payment periods; press n.
b. Key in the periodic interest rate (as a percentage); press ¼.
c. Key in the mortgage amount; press $.
*
d. To obtain the periodic payment amount, press P.*
3. Calculate and key in the actual net amount disbursed.
*
z If fees are stated as a percentage of the mortgage amount (points), recall
the mortgage amount (:$) key in the fee (percentage) rate; press
b-$.
z If fees are stated as a flat charge, recall the mortgage amount (:$);
key in the fee amount (flat charge); press -$.
z If fees are stated as a percentage of the mortgage amount plus a flat
charge, recall the mortgage amount (:$); key in the fee
(percentage) rate, press b-; key in the fee amount (flat charge); press
-$.
4. Press ¼ to obtain the interest rate per compounding period.
5. To obtain the annual nominal percentage rate, key in the number of periods
per year, then press µ.
*
Positive for cash received; negative for cash paid out.