HP12c Financial Questions... yet again!



#15

Dear members:

What is the CASH VALUE function with the HP12c?

I've been in the manual and can't quite find the exact function.

For example: A mortgage payment of 750 per/month for 20 years( NEW EDIT), effective rate of interest 4.88088482 and 5000 down payment. What is the purchase price.

< 2 [n] 1 [CHS] [PV] 0 [PMT] 1.10 [FV] [i] ->4.88088482%, the effective rate monthly. That was courtesy of you guys here. >

It's not the present value, as that incorporates the interest. How do i strip out the interest on the HP12c.

Giving me $83,809.29 as my correct answer?

Warmly,
Blake

Edited: 2 May 2008, 2:48 a.m. after one or more responses were posted


#16

Hi Blake, that 4.88% seems a very high monthly rate - is it for 6 months? How long does the mortgage run for? I think you'll find "cash value" is basically the same as PV - this is discounted for interest.

Cheers,
Tony


#17

I can get the $83,809.29 assuming the interest rate is 10% pa convertible 6 monthly, i.e. 5% true per 6 month period, and the mortgage runs for 20 years:

6 [n] 1 [CHS][PV] 0 [PMT] 1.05 [FV] [i] -> 0.816484605 % per month

[g] [END]

240 [n] 750 [CHS][PMT] 0 [FV] [PV] ->$78,809.29

5000 [+] -> $83,809.29

The PV of $78,809.29 here does effectively strip the interest out of the payment stream (of $180,000).

Cheers,
Tony


Edited: 1 May 2008, 11:31 p.m.


#18

Tony... genius at the HP12c! That works perfect... but i can never find these type of sequences on in the Manual.

Tell me, is necessary to type in [g] [END] at that exact place. what if i put it in the beginning? or if the sequence was slightly rearranged. does this always effect outcomes? For simple interest calculations, i can put in [n] or [PMT] before or after? Is there rules for this with the HP12c?

6 [n] 1 [CHS][PV] 0 [PMT] 1.05 [FV] [i] -> 0.816484605 % per month

[g] [END]

240 [n] 750 [CHS][PMT] 0 [FV] [PV] ->$78,809.29

5000 [+] -> $83,809.29

I am ecstatic with this new info... thank you all.

blake


#19

Quote:
Tell me, is necessary to type in [g] [END] at that exact place. what if i put it in the beginning? or if the sequence was slightly rearranged. does this always effect outcomes?

A little experimenting on you part won't hurt - and you become more proficient with your machine...;-)


#20

George: lol.. yes, this being the reason i end up coming over here. A little to much experimenting and not enough knowledge on it... but you guys here are a godsent. ;)

Quote:
A little experimenting on you part won't hurt - and you become more proficient with your machine...;-)


#21

Quote:
Tell me, is necessary to type in [g] [END] at that exact place. what if i put it in the beginning? or if the sequence was slightly rearranged. does this always effect outcomes? For simple interest calculations, i can put in [n] or [PMT] before or after? Is there rules for this with the HP12c?

Quote:
George: lol.. yes, this being the reason i end up coming over here. A little to much experimenting and not enough knowledge on it... but you guys here are a godsent. ;)


Seriously, the questions in your post #4 are such that you can easily answer them yourself by - well - experimenting! Put the [g][END] sequence in different places of the calculation and compare the results: they should all be the same, no expert knowledge required here ;-) Then rearrange and compare results and so on...

Edited: 2 May 2008, 5:15 a.m.

#22

Quote:
Tony... genius at the HP12c! That works perfect... but i can never find these type of sequences on in the Manual.

The "Solutions Manual" has a chapter on Canadian Mortgages but they do the interest rate calc slightly differently:

0 [PMT]
6 [n] 200 [ENTER][PV] 10 [+] [CHS] [FV] [i] -> 0.816484605 % per month

The book also shows [g][END] being set before this calculation but as PMT=0 the payment mode is irrelevant.

I only do the calc the way I do because I think "OK over 6 periods $1 grows to $1.05". Hence n=6 PV=1 FV=-1.05. That's easier for me than thinking "200 will grow to 210".


Quote:
Tell me, is necessary to type in [g] [END] at that exact place. what if i put it in the beginning? or if the sequence was slightly rearranged. does this always effect outcomes?

If PMT=0 (and you are not solving for a non-zero PMT) then the PMT mode doesn't matter. I only tend to mention it at the point where it is necessary.


Quote:
For simple interest calculations, i can put in [n] or [PMT] before or after? Is there rules for this with the HP12c?

Any input order is fine - you just need everything set before you solve. I normally work left to right when writing down a solution.
The best thing is that if the answer is wrong you don't need to re-key everything - just correct the input error, and try again.

Quote:
6 [n] 1 [CHS][PV] 0 [PMT] 1.05 [FV] [i] -> 0.816484605 % per month

[g] [END]

240 [n] 750 [CHS][PMT] 0 [FV] [PV] ->$78,809.29

5000 [+] -> $83,809.29


You can also use NPV to get the purchase price directly but need 3 entries for the 240 PMTs as you can only have Nj up to 99:

Solve for [i] as above then do

5000 [g][Cfo]

750 [g][Cfj] 80 [g][Nj] then repeat twice more or do:

[x<>y][g][Cfj] [x<>y}[g][Nj] [x<>y][g][Cfj] [x<>y}[g][Nj]

[f][NPV]->83,809.29


Quote:

I am ecstatic with this new info... thank you all.

blake


Thanks for your enthusiasm Blake.

It's a great little machine!

Cheers,
Tony


#23

Tony,

That certainly straightened me out! I was able to just move a few things around and get the PMT for a few other questions. Now onto figuring out the outstanding balance after two years of payments.

Wish me luck.

It's 3:30 am... far too late for Finance!

Nite all, appreciate all your help.

Blake


#24

Quote:
Tony,

That certainly straightened me out! I was able to just move a few things around and get the PMT for a few other questions. Now onto figuring out the outstanding balance after two years of payments.

Wish me luck.


Good Luck Blake!

20-2=18 years to go so try 18[g][n][PV] ;-)

Cheers,
Tony

#25

6 [n] 1 [CHS][PV] 0 [PMT] 1.05 [FV] [i] -> 0.816484605 % per month

if the interest is compounded ANNUALLY do i only change the 6 [n] to 1 [n] with the example above?

Monthly = 12
Quarterly = 4
Semi-Annually = 6
Annually = 1

Would this work if i altered the variables?


#26

Quote:
6 [n] 1 [CHS][PV] 0 [PMT] 1.05 [FV] [i] -> 0.816484605 % per month

if the interest is compounded ANNUALLY do i only change the 6 [n] to 1 [n] with the example above?

Monthly = 12
Quarterly = 4
Semi-Annually = 6
Annually = 1

Would this work if i altered the variables?


The example has monthly payments so you need a monthly interest rate. That is the bottom line :-)

Also, you need the appropriate FV.

My guess is you probably need n to represent the number of months in the interest rate compounding period

Monthly = 1, (no need to do this as the i =10%/12)

Quarterly = 3, FV=1+.1/4

Semi-Annually = 6, FV=1+.1/2, as in your example

Annually = 12, FV=1.1

Cheers,
Tony

#27

I don't believe there is anything other than the PV.

I am also familiar with the TI BAII+ and the Casio and Sharp financial calculators and am unaware of any "cash value" function.

When you say "It isn't the PV, as it includes interest", I don't believe that is correct.

The PV doesn't include interest, per se, but the time value of money.

The PV is, of course, the amount today that is equal to the payments occuring in the future... and the time value of money must be taken into account.

The 4.88% you show is the rate per period that is equivalent to 10%, per year nominal. With n of 2, this is a semiannual rate, not an effective monthly rate (there is no such thing with that language). Effective rates are almost entirely annual rates equal to nominal rates compounded more frequently than once a year.

Also, you don't specify the number of payments. 180? 360?

So, I can't answer your question as I don't understand what you're asking well enough. :-)

Gene


#28

Hey everyone... thanks again.

Yes.. i see where i made my mistake in the effective rate. The interest is compounded semi-annually.
Gene: I concur, now, the language does not exist. ;)

And the time is 20 years so... n = 240 (opps)

My frustration caused the slight attention to detail in this post. Excuse me.

Thank you for the clear explanation as well.

I'm trying the above formula with the HP12c, now!

Best, blake

Edited: 2 May 2008, 2:46 a.m.


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