UGBA+180+-+HP12C+Tutorial+-+1+31+2011

UGBA+180+-+HP12C+Tutorial+-+1+31+2011 - UGBA 180 HP12C...

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Click to edit Master subtitle style 2/10/11 UGBA 180 HP12C Tutorial Session January 31, 2011 11
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Example 1: Calculating Present Value Q: A development company would like to purchase a group of condominiums with an annual net cash flow of $17,500. The expected holding period is 5 years, and the estimated selling price at that time is $540,000. Calculate the maximum amount the company can pay for the condominiums in order to realize a 12% annual yield. Keystrokes Comments 5 ˛ “n” Stores n. 12 • “i” Stores i. 17,500 & “PMT” Stores PMT. PMT is positive since it represents cash received . 540,000 — “FV” Stores FV. “g” & “END” Sets payment mode to End. “PV” -$369,494.09 represents the maximum purchase price to provide a 12% annual yield. PV is displayed with a minus sign since it represents cash paid out . 22
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Example 2: Calculating the Yield Q: An investor wants to achieve an 8% annual return on investment over 10 years. The investor wants to receive 5,000 per year. What should he/she pay for the investment opportunity?
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This note was uploaded on 02/07/2011 for the course UGBA 180 taught by Professor Nelson during the Spring '08 term at University of California, Berkeley.

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UGBA+180+-+HP12C+Tutorial+-+1+31+2011 - UGBA 180 HP12C...

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