Casio FC-200V - Example 5: Re-financing Comparison

Doing Amortization with AMRT
QED Education Scientific
8
EXE
CMPD
4
EXE
8
8
EXE
8
0
(
─)
0
EXE
0
1
EXE
2
EXE
SOLVE
1
2
AMRT
1
EXE
2
EXE
SOLVE
0
0
1
EXE
CMPD
2
EXE
3
8
EXE
5
6
(
─)
0
5
1
•
4
•
7
8
Often borrower would want to re-finance long term loan. Using CMPD and AMRT in
combination, we can easily compare the cost of re-financing with the savings due to
decide whether the re-financing exercise would be profitable.
Example 5 ►>> A borrower has an $8,000 loan with QED Finance which is to be
repaid over 4 years at %18
12
=j . In case of early repayment, the borrower is to pay
a penalty of 3 months’ payments. Right after the 20
th
payment, the borrower
determines that his banker would lend him the money at %5.13
12
=j . Should he re-
finance?
Operation
First let’s find the monthly payment of the loan.
 Enter CMPD mode, make sure calculator displays [Set:End]. Then scroll down
and enter 48 for [n], 18 for [I%], (-)8000 for [PV], 0 for [FV], 12 for [P/Y] and [C/Y].
 Scroll up to select [PMT] and solve it.
So the monthly payment is about $235 and the outstanding principal after 20
payments would be about $5340.78, as calculated below.
 Enter AMRT mode and scroll down to enter 1 for [PM1] and 20 for [PM2]. Then,
scroll to select [BAL:Solve] and solve it.
Thus the total to be refinanced is 5340.78 + 3(235) = $6045.78. Now we can obtain
the new monthly payment at CMPD mode for comparison.
 Enter CMPD mode, enter 28 (less 20 months) for [n], 13.5 for [I%], (-)6045.78 for
[PV]. Other parameters’ values are retained.
Output: PMT =
234
.
9999969
•
•
•
Output:
BAL
=
-
5340.778356
Screenshot from
Casio
TVM