HP 12C Financial calculator - Manual (Page 130)

130 Section 12: Real Estate and Lending
File name: hp 12c_user's guide_English_HDPMBF12E44 Page: 130 of 209
Printered Date: 2005/7/29 Dimension: 14.8 cm x 21 cm
The Rent or Buy Decision
The question of whether to rent or purchase a residence is not always easy to
answer, especially when the time period over which you would own or rent a
house is short. This program performs an analysis which could be helpful in
reaching a decision. Essentially, it calculates a yield or rate of return on the
proposed investment. This yield may be compared with the yield obtained by
renting a residence and investing the down payment and monthly payment
differences in a savings account or other investment opportunity. This program
takes into account the tax advantages obtained by a home owner on property
taxes and mortgage interest.
First the program computes the Net Cash Proceeds upon Resale (NCPR), * next the
yield on the investment in the house and then the value of the hypothetical savings
account at the end of the investment period. A comparison of the NCPR and the
final balance of the savings account and a comparison of the yields should aid in
determining whether to rent or buy.
KEYSTROKES DISPLAY KEYSTROKES DISPLAY
fs M 33- 15
fCLEARÎ 00- t 34- 31
M 01- 15 d 35- 33
M † 02- 15 :n 36- 45 11
:7 03- 45 7 z 37- 10
b 04- 25 :4 38- 45 4
- 05- 30 - 39- 30
:n 06- 45 11 :.0 40-45 48 0
?0 07- 44 0 b 41- 25
:$ 08- 45 13 :P 42- 45 14
fCLEARG 09- 42 34 :4 43- 45 4
* The Net Cash Proceeds upon Resale (NCPR = sales price – commission – mortgage balance),
is the pre-tax proceeds. The program assumes that the buyer reinvests in like property and is
not subject to capital gains tax.
† FV is repeated in the program twice to ensure that it is computed and not stored.