HP 12-C Practice Exercises – Six Functions of $1 and Mortgages

by Joe Stampone on December 15, 2009

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HP 12-C iphone

Last night I wrapped up my third full semester as a masters student at the NYU Schack Institute of Real Estate. It was another great semester in which I learned a lot, attended some great events, and met a lot of cool people.

The end of the semester also means that, over the next few weeks, I’ll be spending a lot more time focusing on ASotREG.  To this point, admittedly, I’ve been running the blog like a hobby, going forward I’ll be running the blog as part of a strategic business plan. Look for lots of great content, some interesting guest posts, and general improvements to the user-friendliness  and design of the site. If you have any suggestions or if there is a specific topic you’d like me to write about, please don’t hesitate to contact me.

The semester culminate in a surprisingly difficult Real Estate Valuation and Feasibility Analysis exam. The exam was entirely HP 12-C based. I wrote a blog post about the HP 12-C all the way back on February 6th, when this blog was in it’s infant stages and I downplayed its significance.  I’ve since learned about the power and importance of being whiz on the HP 12-C. My professor, who works for Credit Suisse, said he has never been to a meeting where everyone didn’t have an HP 12-C in front of them. With that in mind,  I wanted to provide a little practice on the HP 12-C with the 6 functions of $1 and some basic mortgage problems. At the bottom I’ve uploaded a document containing the answers and the keystrokes to arrive at those answers:

Six Functions of $1

1. What is the future value of $100 compounded at 10% annually for 5 years?

2. What is the future worth of $100 per year deposited for 7 years at 9%?

3. What is the size of each payment that must be made each year to accumulate $920.04 at 9% interest in 7 years?

4. What is the present worth of $161.05 to be received at the end of 5 years discounted at 10% annually?

5. What is the present worth of an annuity of $100 per year to be received over the next 7 years discounted at 9%?

6. What level annual payments will amortize a 7-year loan of $503.30 at 9% interest?

7. What is the present worth of $11,000 to be received 5 years from now dicounted at 12%?

8. Calculate the present worth of $1.5 million to be received 25 years from now discounted at 15%?

9. What is the present worth of $125,00 per year for 5 years discounted at 12%?

10. Calculate the present worth of $215,000 per year for 15 years discounted at 12%?

11. What is the present worth of $13,000 per month for 25 years discounted at 8%?

12. What is the present worth of $10,000 per year for 5 years, plus $110,000 to be received at the end of the period, all discounted at 12%?

13. You have received a loan of $50,000 for 25 years with level annual payments at 8% interest. What is the annual payment?

14. Calculate the present value of a property worth $125,000 in 30 years, assuming a 9% ROI.

15. If NOI is $10,000 and ROI is 9%, what is the present value of the property’s income stream over 25 years?

16. A shopping center generates $100,000 in NOI in year 1, $125,000 in year 2, $150,000 in year 3, $130,000 in yearv4 and $140,000 in year 5. At the end of the fifth year, the shopping center is sold for $1,200,000. What is the total present value of the cash flow and reversion discounted at 12%?

Mortgages

1. What level monthly payments will amortize a loan of $175,000 at 9% interest over a 30 year term?

2. Calculate the annual mortgage constant (annual debt service/total mortgage) for a 15 year mortgage at 10% interest, monthly payments.

3. What is the principal mortgage amount for a loan which is amortized with monthly payments of $2,162.23 over a 30-year term at 7% interest?

4. What is the maximum mortgage a lender would give at an 80% loan-to-value (LTV), if a property appraised at $2,350,000?

5. Calculate the balance of a $245,000, 15-year mortgage at 8% (monthly payments) after eight years?

6. Calculate the annual mortgage constant if monthly payments equal $16,909.77 and the principal amount is $2,100,000.

7. In the problem above, what is the interest rate if the loan term is 25 years?

Answers (HP 12-C) (Let me know if you have any questions or would like more practice)

P.S. Has anyone used the HP 12-C app for the i-phone?

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  • Brad_Cullumber

    Joe,

    I almost purchased the 12-C app. for the iPhone the other day, but apparently multiple users are experiencing the app. crashing to the point where they can no longer use it. I think it might be best to wait until they work out the kinks. From what I've read, HP has developed the product themselves, rather than using an independent developer, so things should work their way out soon. The price is around $15.

    -Brad

  • http://www.astudentoftherealestategame.com/ Joe Stampone

    Hey Brad,

    Thanks for your input. I'm curious to see if HP can do a better job with the app, I'm surprised they allowed an independent company to develop their app. It would be nice to have, for the right price, but there's still something about being able to physically push the buttons. Thanks for reading.

  • JBWheel

    Have you used the book “Professional Problem Solving for the HP 12-C?” Whats happening to the blog after NYU is completed?

  • http://www.astudentoftherealestategame.com/ Joe Stampone

    Hey JB, thanks for the comment. I haven't used that book, do you recommend it? Are there other books/sources you recommend for those of us trying to perfect our HP 12-C skills?

    After NYU and over time I will only continue to grow the blog. It will only get better with time. My goal is to be the ultimate resource for students and young professionals looking to break into real estate or progress their real estate career.

    Thanks for reading, let me know if you have any suggestions to improve the blog.

  • JBWheel

    Have you used the book “Professional Problem Solving for the HP 12-C?” Whats happening to the blog after NYU is completed?

  • http://www.astudentoftherealestategame.com/ Joe Stampone

    Hey JB, thanks for the comment. I haven't used that book, do you recommend it? Are there other books/sources you recommend for those of us trying to perfect our HP 12-C skills?

    After NYU and over time I will only continue to grow the blog. It will only get better with time. My goal is to be the ultimate resource for students and young professionals looking to break into real estate or progress their real estate career.

    Thanks for reading, let me know if you have any suggestions to improve the blog.

  • MWoolen

    Keir’s Guide to Your Financial Calculator 2010 teaches the keystrokes for all the major calculators HP 10BII & 12C and others…about $35.00 Helps student understand TVM concepts…..Also Keir has an online calculator course ,which I would take “AFTER” a student works with the manuel…..MJW

  • http://www.astudentoftherealestategame.com/ Joe Stampone

    Thanks for the reference, here’s a link to the Kier guide – http://www.amazon.com/Keirs-Guide-Your-Financial-Calculator/dp/193325937X