HP 12C Platinum User Manual page 170

170 Section 12: Real Estate and Lending
Example: You are being transferred for 4 years to a distant city and are faced
with the decision of whether to rent or to buy a house. A quick survey of the
housing market indicates that you can purchase an acceptable house for
$270,000 with a $7,000 down payment on a 30-year mortgage at 6% interest.
The closing costs would be about $3,700. Selling costs include a 6% commission
for resale and miscellaneous other fees that amount to another 2% of the sale price.
Housing in the area is appreciating 5% per year. Property taxes would be about
$300 per month, and you estimate that maintenance would cost an additional
$165 per month.
An alternative would be to rent a similar dwelling at $900 per month and to invest
the difference between the purchase cost and rent at 3% interest. Your personal
income tax rate (marginal) is 25% Federal and 5% State. Which alternative is
more financially attractive ?
Keystrokes Keystrokes
(RPN mode) (ALG mode)
f] f[
g gÂ
fCLEARH fCLEARH
7000?1 7000?1
30?2 30?2
6?3 6?3
300?4 300?4
165?5 165?5
3700?6 3700?6
8?7 8?7
900?8 900?8
3?9 3?9
30?.0 30?.0
fCLEARG fCLEARG
4n 4n
5¼ 5¼
270000$ 270000$
t t
Display
0.00
Down payment.
7,000.00
Life of mortgage.
30.00
Interest rate.
6.00
Property taxes.
300.00
Monthly expenses.
165.00
Closing costs.
3,700.00
Resale costs (as a
8.00
percentage).
Rent.
900.00
Savings interest rate.
3.00
Tax bracket.
30.00
Clear financial registers.
30.00
Years in investment.
4.00
Yearly appreciation rate.
5.00
House price.
270,000.00
NCPR (calculated).
53,095.65