Lending 25
Example 1: A $60,000 land loan at 10% interest calls for equal semi-annual principal
payments over a 6-year maturity. What is the loan reduction schedule for the first year?
(Constant payment to principal is $5000 semi-annually). What is the fourth year's
schedule (skip 4 payments)?
12c platinum / 12C
RPN Keystrokes
12c platinum
ALG Keystrokes
Display Comments
5000?0 5000?0
10\2z\ 60000?1
\\
10z2³?2
5.00
Semi-annual interest rate.
60000~b :1§:2b+
3,000.00
First payment's interest.
:0+ :0?-1³
8,000.00
Total first payment.
O:0- :1
55,000.00
Remaining balance.
~b
§:2b+
2,750.00
Second payment's interest.
:0+ :0?-1³
7,750.00
Total second payment.
O:0- :1
50,000.00
Remaining balance after
the first year.
4:0§- 4§:0³?-1
~b
:1§:2b+
1,500.00
Seventh payment's interest.
:0+ :0?-1³
6,500.00
Total seventh payment.
O:0- :1
25,000.00
Remaining balance.
~b
§:2b+
1,250.00
Eighth payment's interest.
:0+ :0?-1³
6,250.00
Total eighth payment.
O:0- :1
20,000.00
Remaining balance after
fourth year.
Add-On Interest Rate Converted to APR
An add-on interest rate determines what portion of the principal will be added on for
repayment of a loan. This sum is then divided by the number of months in a loan to
determine the monthly payment. For example, a 10% add-on rate for 36 months on $3000
means add one-tenth of $3000 for 3 years (300 x 3) - usually called the "finance charge" -
for a total of $3900. The monthly payment is $3900/36.
This keystroke procedure converts an add-on interest rate to a annual percentage rate
when the add-on rate and number of months are known.
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