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212 Section 14: Leasing
File name: hp 12c pt_user's guide_English_HDPMF123E27 Page: 212 of 275
Printed Date: 2005/8/1 Dimension: 14.8 cm x 21 cm
Solving for Yield
Solving for yield is essentially the same as solving for Internal Rate of Return (IRR).
The keystrokes are as follows:
1. Press fCLEARH.
2. Key in the amount of the first cash flow then press gJ. This initial amount
is the difference between the initial loan amount and any payments received
at closing time. Observe the sign convention: positive for cash received and
negative for cash paid out.
3. Key in the amount of the first cash flow then press gK. Then key in the
number of times that cash flow occurs then press ga.
4. Key in 0gK then the number of advance payments minus one. Then
press ga.
5. Key in the residual then press gK. Then press fL to solve for
periodic yield.
Example:
Equipment worth $5,000 is leased for 36 months at $145 per month.
The lessee has agreed to pay the first and last month’s payments in advance. At
the end of the lease, the equipment may be purchased for $1,500. What is the
annual yield to the lessor if the equipment is purchased
?
Keystrokes
(RPN mode)
Keystrokes
(ALG mode)
Display
f]
f[
f
CLEAR
H
f
CLEAR
H
5000
Þ\
145
\
2
§=
gJ
145
§
2
=
5000
Þ
gJ
–4,710.00
Net amount of cash
advanced.
145
gK
34
g
a
145
gK
34
g
a
34.00
Thirty-four cash flows of
$145.00.
0
gK
0
gK
0.00
Thirty-fifth cash flow.
1500
gK
1500
gK
1,500.00
Thirty-sixth cash flow.
fL
12
§
fL§
12
³
18.10
Annual yield to lessor.