User Manual

PV: Unused PMT: Unused

FV: Unused R

: Fin. charge

: Payment # R

: # months

-R

: Unused

1. Key in the program.

2. Key in the number of months in the loan and press

3. Key in the payment number when prepayment occurs and press

4. Key in the total finance charge and press

to obtain the unearned interest (rebate).

5. Key in the periodic payment amount and press

to find the amount of principal

outstanding.

6. For a new case return to step 2.

Keystrokes Display

180

5.81 Rebate.

39.33

190.84 Outstanding balance.

Graduated Payment Mortgages

The Graduated Payment Mortgage is designed to meet the needs of young home

buyers who currently cannot afford high mortgage payments, but who have the

potential of increasing earning in the years on come.

Under the Graduated Payment Mortgage plan, the payments increase by a fixed

percentage at the end of each year for a specified number of years. Thereafter,

the payment amount remains constant for remaining life of the mortgage.

The result is that the borrower pays a reduced payment (a payment which is less

than a traditional mortgage payment) in the early years, and in the later years

makes larger payments than he would with a traditional loan. Over the entire

term of the mortgage, the borrower would pay more than he would with

conventional financing.

Given the term of the mortgage (in years), the annual percentage rate, the loan

amount, the percentage that the payments increase, and the number of years

that the payments increase, the following HP-12C program determines the

monthly payments and remaining balance for each year until the level payment is

reached.