User`s guide

Additional Examples142
Step 3
Enter actual, current values for N and PV; then find the new I/YR for the discounted mortgage
with balloon.
Annual Percentage Rate for a Loan With Fees
The Annual Percentage Rate, APR, incorporates fees usually charged when a mortgage is
issued, which effectively raises the interest rate. The actual amount received by the borrower
(the PV) is reduced, while the periodic payments remain the same. The APR can be calculated
given the term of the mortgage (N periods), the annual interest rate (I/PR), the mortgage
amount (new PV), and the amount of the fee.
Remember the cash flow sign convention: money paid out is negative; money received is
positive.
Example: APR for a Loan With Fees
A borrower is charged two points for the issuance of a mortgage. (One point is equal to 1%
of the mortgage amount.) If the mortgage amount is 160,000 for 30 years and the annual
interest rate is 8.5% with monthly payments, what APR is the borrower paying?
Set to End Mode. Press
\¯ if BEGIN annunciator is displayed.
V\Ú
60.00 Stores number of payments until
balloon.
É
88,706.74 Calculates the balloon payment
(add to final payment).
Table 13-10
Keys Display Description
vÙAYGÙ
18.00 Stores remaining number of
payments.
jd:::yÏ
-79,000.00 Stores price of mortgage.
Ò
20.72 Calculates the return on this
discounted mortgage.
Table 13-9 Calculating the balloon payment
Keys Display Description
Table 13-11 Calculating the annual percentage rate considering fees
Keys Display Description
JG\Í
12.00 Sets payments per year.
g7VÒ
8.50 Stores interest rate.