HP 10bII - Annual Percentage Rate for a Loan with Fees

Step 3. Enter actual, current values for N and PV; then find the new
I/YR for the discounted mortgage with balloon.
Keys: Display: Description:
OOOOH 18.00 Stores remaining
number of payments.
DOTTO -79,000.00 Stores price of
mortgage.
(v8
20.72
Calculates
the
return
on
this
discounted
mortgage.
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 (№ periods), the annual interest rate (I/ PR), the mortgage
amount (new РИ), 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 СЄ if BEGIN annunciator is displayed.
Keys: Display: Description:
[G9
ee
с)
12.00
Sets
payments
per
year.
20909
8.50
Stores
interest
rate.
GOCE 360.00 Stores length of
mortgage.
@OODDDNH ^ 160,000.00 Stores original amount
of mortgage.
8: Additional Examples 101