User`s guide

Additional Examples
147
What if … TVM Calculations
One of the most valuable aspects of the HP 10bII+’s TVM application is the ease with which
it handles the question “what if …” in financial calculations. For example, one of the most
popular “what if …” questions is, “What if the interest rate changes to …? How will that affect
my payment?” To answer this question, once you have calculated a payment based on one
interest rate, all you need to do is enter the new interest rate and recalculate PMT.
Some of the examples earlier in this manual have included some brief encounters with “what
if …” questions, but a more complete example follows.
Example
You are about to sign on the dotted line for a 30-year, 735,000 mortgage, on a vacation
home. The annual interest rate is 11. 2 % .
Part 1
What will your payments be at the end of the month?
Set to End mode. Press \¯ if BEGIN annunciator is displayed.
Part 2
Your company’s regular payroll is generated every other Friday. The bank agrees to
automatically draw payments of 3,555.00 out of each paycheck (approximately half of what
a monthly payment would be) and adjust the payment period accordingly (26 compounding
periods per year). What would be the new term of the loan?
Table 13-17 Calculating the monthly payment
Keys Display Description
JG\Í
12.00 Sets payments per year.
jDV:::Ï
735,000.00 Stores known values.
JJ7GÒ
11. 2 0
D:\Ú
360.00
:É
0.00
Ì
-7,110.88 Calculates payment.
Table 13-18 Calculating the number of years required to pay off the loan
Keys Display Description
DVVVyÌ
-3,555.00 Enters new payment.