Texas Instruments BA Real Estate - Calculating the Yield of a Discounted Mortgage

80 Other Financial Tools
BEAR-CH3.DOC BA Real Estate Guidebook Bob Fedorisko Revised: 08/29/96 9:19 AM Printed: 09/28/99 1:21 PM
Page 80 of 20
Press
# ,
until the BGN indicator disappears.
Steps Keystrokes Display
Clear TVM values.
#
-
0.00
Set P/Y and C/Y to 12.
#
+
12
j
j
P/Y = 12.00
C/Y = 12.00
12.00
Enter original term.
30
0
TRM= 30.00
Enter interest rate.
8
1
I% = 8.00
Enter face value of
mortgage.
200
q 2
LN = 200,000.00
Compute payment.
$
3
PMT=
-
1,467.53
Enter discounted
purchase price.
180
q 2
LN = 180,000.00
Enter number of
payments paid and
store in memory.
3
O
12
j T g
MEM= 36.00
Enter number of
remaining payments.
]
#
* X
]
g j
#
*
N = 324.00
Compute annual yield
for remaining term.
$
1
I% = 8.89
Calculating the Yield of a Discounted Mortgage
A person is holding a mortgage for $200,000 at 8% fixed-
rate interest for 30 years. She has carried the note for
three years and has offered it to you. If she accepts your
offer of $180,000 for the note, what will be your yield?
Solution