HP 12C User Manual page 170

170 Section 12: Real Estate and Lending
In the example cited, the rental payment stream for months 7 through 24 are
"deferred annuities," as they start at some time in the future. The cash flow
diagram from the investor's viewpoint looks like this:
To find today's present value of the cash flows assuming a desired yield, the NPV
technique may be used. (Refer to pages 73 through 77.)
Example 2: A 2-year lease calls for monthly payments (at the beginning of the
month) of $500 per month for the first 6 months, $600 per month for the next 12
months, and $750 per month for the last 6 months. If you wish to earn 13.5%
annually on these cash flows, how much should you invest (what is the present
value of the lease) ?
Keystrokes
(RPN mode)
f]
fCLEARH
500gJ
gK
5ga
600gK
12ga
750gK
6ga
13.5gC
fl
File name: hp 12c pt_user's guide_English_HDPMF123E27
Printed Date: 2005/8/1
Keystrokes
Display
(ALG mode)
f[
fCLEARH 0.00
500.00
500gJ
gK
500.00
5ga
5.00
600.00
600gK
12ga
12.00
750.00
750gK
6ga
6.00
1.13
13.5gC
fl
12,831.75
Page: 170 of 275
Dimension: 14.8 cm x 21 cm
Initialize.
First cash flow.
Second through sixth cash
flows.
Next twelve cash flows.
Last six cash flows.
Monthly interest rate.
Amount to invest to
achieve a 13.5% yield.