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# HP 10bii Calculator - Cash Flow Examples

Calculator symbol key
The procedures in this document use the following text to represent symbol keys:
 Key Description Text Representation colored key; shift key SHIFT
Example of calculating a car loan
A new car is financed with a three year loan at 10.5 percent annual interest, compounding monthly. The price of the car is 14, 500. The down payment is 1, 500.
Part 1
What are the monthly payments at 10.5 percent interest? (Assume the payments start one month after the purchase or at the end of the first period.)
Set to END mode. Press SHIFT, then BEG/END if BEGIN in the annunciator is displayed.
 Key Display Description Press 12, SHIFT, then P/YR 12.00 Sets periods per year Press 3, x, 12, then n 36.00 Stores number of periods in loan Press 10, [.], 5, then I/YR 10.50 Stores annual nominal rate Press 14500 [-], 1500, then PV 13,000.00 Stores amount borrowed Press 0, then FV 0.00 Stores the amount left to pay after 3 years Press PMT -422.53 Calculates the monthly payment. The negative sign indicates money paid out
Part 2
At a price of \$14, 500, what interest rate is necessary to lower the payment by \$50.00, to 372.53?
 Key Display Description Press [+], 50, then PMT -372.53 Decreases payment from \$422.53 Press I/YR 2.03 Calculates annual \interest rate for the reduced payment
Part 3
If interest is 10.5 percent, what is the maximum that can be spent on the car to lower a car payment to \$375.00?
 Keys Display Description Press 10, [.], 5, then I/YR 10.50 Stores original interest rate Press 375, [+/-], then PMT -375.00 Stores desired payment Press PV 11,537.59 Calculates amount of money to finance Press [+], 1500, then [=] 13,037.59 Adds the down payment to the amount financed for total price of the car
Example of calculating a home mortgage
The maximum monthly mortgage payment that can be afforded is \$930.00. A \$12,000 down payment was made, and annual interest rates are currently 7.5 percent. If a 30 year mortgage is obtained, what is the maximum purchase price that can be afforded?
Set to END mode. Press SHIFT, then BEG/END if BEGIN in annunciator is displayed.
 Keys Display Description Press 12, SHIFT, then P/YR 12.00 Sets periods per year Press 30, SHIFT, then xP/YR 360.00 Stores the length of the mortgage (30 X 120) Press 0, then FV 0.00 Pays mortgage off in 30 years Press 7, [.], 5, then I/YR 7.50 Stores interest rate Press 930, [+/-], then PMT -930.00 Stores desired payment (money paid out in negative) Press PV 133,006.39 Calculates the loan you can afford with \$930 payment Press [+], 12000, then [=] 145,006.39 Adds \$12,000 down payment for the total purchase price
Example of calculating a mortgage with a balloon payment
A 25 year, \$172,500 mortgage at 8.8 percent annual interest has been obtained. The plan is to own the house for four years then sell it, repaying the loan with a balloon payment. What will the balloon payment be?
Solve this problem using two steps:
1. Calculate the loan payment using a 25 year term.
2. Calculate the remaining balance after 4 years.
Step 1.
First calculate the loan payment using a 25 year term.
Set to END mode. Press SHIFT, then BEG/END if BEGIN in annunciator is displayed.
 Keys Display Description Press 12, SHIFT, then P/YR 12.00 Sets periods per year Press 25, SHIFT, then xP/YR 300.00 Stores length of mortgage (25 X 12 = 300 months) Press 0, then FV 0.00 Stores loan balance after 25 years Press 172500, then PV 172,500.00 Stores annual interest rate Press 8, [.], 8, then I/YR 8.80 Stores annual interest rate Press PMT -1,424.06 Calculates monthly payment
Step 2
Since the payment is at the end of the month, the past payment and the balloon payment occur at the same time. The final payment is the sum of PMT and FV.
The value in PMT should always be rounded to two decimal places when calculating FV or PV to avoid small accumulative discrepancies between non-rounded numbers and actual (dollars and cents) payments. If the display is not set to two decimal places, press SHIFT, DISP, then 2.
 Keys Display Description Press SHIFT, RND, then PMT -1,424.06 Rounds payment to two decimal places, then stores Press 48, then N 48.00 Stores 4 year term (12 x 4) that you expect to own house Press FV -163,388.39 Calculates loan balance after 4 years Press [+], RCL, PMT, then [=] -164,812.45 Calculates total 48th payment (PMT and FV) to pay off loan (money paid out is negative)

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