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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