Calculated Industries 3415 - Purchase Price of a Note - Fully Amortized; Finding the Yield on a Discounted Note

U SER ’ S G UIDE — 51
Purchase Price of a Note — Fully Amortized
The mortgage you are thinking about buying has the following terms
and conditions: 15 years remaining, $100 per month incoming pay-
ments, and you want a 25% yield or return on your investment. In
this case you are paying for the income stream — the incoming pay-
ments — and not the future value.
STEPS KEYSTROKES DISPLAY
Clear calculator o o 0.00
Enter desired yield 2 5 ˆ 25.00
Enter term 1 5 T 15.00
Enter payment amount 1 0 0 p 100.00
Find purchase price l “run” 4,682.68
— DO NOT CLEAR CALCULATOR —
What if you want a 20% yield? Leave all of the above data and re-
enter the 20% interest over the old rate, then re-calculate the loan
amount.
STEPS KEYSTROKES DISPLAY
Enter your new desired
rate of return 2 0 ˆ 20.00
Find purchase price l “run” 5,693.80
Finding the Yield on a Discounted Note
An individual wants to sell you a note under the following terms: 60
months remaining in the term, a face amount when due of $7,500,
10% interest-only payments of $62.50 (incoming). He says he will
sell this note to you for $6,500 if you buy today. If you buy it, what
will be the yield on your investment?
STEPS KEYSTROKES DISPLAY
Clear calculator o o 0.00
Enter future value of
note when due 7 5 0 0 s l 7,500.00
Enter purchase price 6 5 0 0 l 6,500.00
Enter remaining term* 6 0 s b T 60.00
Enter payment amount 6 2 • 5 0 p 62.50
Find your yield ˆ “run” 13.70
*Note: Pressing s b identifies your entry as a periodic value.
— DO NOT CLEAR CALCULATOR —