HP 12c Platinum - Section 12 Real Estate and Lending

158 Appendix B
Savings
Compounding Periods Different From Payment Periods
C = number of compounding periods per year.
P = number of payment periods per year.
i = periodic interest rate, expressed as a percentage.
r = i / 100, periodic interest rate expressed as a decimal.
i
PMT
= ((1 + r / C)
C/P
− 1)100
Investment Analysis
Lease vs. Purchase
PMT
p
= loan payment for purchase.
PMT
L
= lease payment.
I
n
= interest portion of PMT
p
for period n.
D
n
= depreciation for period n.
M
n
= maintenance for period n.
T = marginal tax rate.
Net purchase advantage =
()
∑
=
+
−
k
n
n
i
nn
1
1
)(owning ofcost )(leasing ofcost
Cost of leasing(n) = (1 − T) PMT
L
Cost of owning(n) = PMT
p
− T(I
n
+ D
n
) + (1 − T)M
n
Break-Even Analysis and Operating Leverage
GP = Gross Profit.
P = Price per unit.
V = Variable costs per unit.
F = Fixed costs.
U = number of Units.
OL = Operating Leverage.
GP = U(P − V) − F
()
()
FVPU
VPU
OL
−−
−
=
Profit and Loss Analysis
Net income = (1 − tax) (net sales price − manufacturing expense − operating expense)
Net sales price = list price(1 − discount rate)
where operating expense represents a percentage of net sales price.