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 (incom-
ing). 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 [On/C] [On/C] 0.00
Enter future value of
note when due 7,500 [FV] 7,500.00
Enter purchase price 6,500 [L/A] 6,500.00
Enter remaining term 5 [Term] 5.00
Enter payment amount 62.50 [Pmt] 62.50
Find your yield [Int] “run” 13.70
— DO NOT CLEAR CALCULATOR —
What should you pay for this trust deed if you desired an 18%
yield on your investment?
Steps Keystrokes Display
Enter your desired yield 18 [Int] 18.00
Find purchase price [L/A] “run” 5,530.99
30 – Qualifier Plus
®
IIx DT
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