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Section 12: Real Estate and Lending 163
File name: hp 12c pt_user's guide_English_HDPMF123E27 Page: 163 of 275
Printed Date: 2005/8/1 Dimension: 14.8 cm x 21 cm
Calculate the remaining balance of the loan after five years.
Keystrokes
(RPN mode)
Keystrokes
(ALG mode)
Display
5
gA
5gA
60.00
Number of periods to
be amortized.
M
M
258,377.24
Remaining balance of
the loan after five years.
:n
:n
60.00
42
-n
-42n
18.00
New life of loan.
250000
Þ$
¼
250000Þ$
¼
1.01
Percent monthly yield.
(calculated).
12
§
§12³
12.11
Percent annual yield.
The Rent or Buy Decision
The question of whether to rent or purchase a residence is not always easy to
answer, especially when the time period over which you would own or rent a
house is short. This program performs an analysis which could be helpful in
reaching a decision. Essentially, it calculates a yield or rate of return on the
proposed investment. This yield may be compared with the yield obtained by
renting a residence and investing the down payment and monthly payment
differences in a savings account or other investment opportunity. This program
takes into account the tax advantages obtained by a home owner on property
taxes and mortgage interest.
First the program computes the Net Cash Proceeds upon Resale (NCPR),
*
next the
yield on the investment in the house and then the value of the hypothetical savings
account at the end of the investment period. A comparison of the NCPR and the
final balance of the savings account and a comparison of the yields should aid in
determining whether to rent or buy.
*
The Net Cash Proceeds upon Resale (NCPR = sales price – commission – mortgage balance),
is the pre-tax proceeds. The program assumes that the buyer reinvests in like property and is
not subject to capital gains tax.