HP 12C - The Rent or Buy Decision

258 Appendix E: Formulas Used
File name: hp 12c pt_user's guide_English_HDPMF123E27 Page: 258 of 275
Printed Date: 2005/8/1 Dimension: 14.8 cm x 21 cm
The Rent or Buy Decision
Market Value = PRICE(1 + I)
n
where:
I = appreciation per year (as decimal)
n = number of years
Net Cash Proceeds on Resale = Market Value – Mortgage Balance – Commission
The interest rate is obtained by solving the financial (compound interest) equation
for i using:
n = number of years house is owned
PV = down payment + closing costs
PMT
= mortgage payment + taxes + maintenance
–
rent – (% tax)
(interest + taxes)
FV = net cash proceeds on resale
Annual interest rate = 12 × i