HP 12C and HP 11C: Loan Amount Using the Annual Loan Constant
Introduction
The program calculates the theoretical loan amount using the following factors:
* NOI: Net Operating Income. The estimated net operating income the property is expected to earn annually. An average is usually used.
* DCR: Debt Coverage Ratio. The ratio of net operating income to annual debt service, describing a company's ability to pay its debts. Generally, the larger the DCR, the better. We really don't want DCR to be below 1.
* Number of payments per year, number of years, and annual interest rate of the potential loan.
The ALC, or the annual loan constant is calculated by:
* Either divided the annual debt service by the loan amount (when the amount is known), or
* Determining the periodic payment to amortize a $100 loan given number of payments and interest rate.
Set up:
Number of payments -> N
Interest Rate -> I%YR (or periodic interest rate -> i)
-100 -> PV
0 -> FV
Solve for PMT
The ALC is expressed as a percentage.
The theoretical loan amount is calculated by:
Loan = NOI / (DCR * ALC%)
HP 12C Program: Loan Amount Using the Annual Loan Constant
Instructions:
Store the following:
NOI in R1
DCR in R2
Number of payments per year in R3
Number of periods in [ n ]
Periodic Interest rate in [ i ]
Program:
Step; Key; Code
01; 1; 1
02; 0; 0
03; 0; 0
04; CHS; 16
05; PV; 13
06; 0; 0
07; FV; 15
08; PMT; 14
09; RCL 3; 45, 3
10; *; 20
11; RCL 2; 45, 2
12; x<>y; 34
13; %; 25
14; RCL 1; 45, 1
15; x<>y; 34
16; ÷; 10
17; GTO 00; 43, 33, 00
(* HP 12C Platinum, step 17: GTO 000; 43, 33, 000)
HP 11C Program: Loan Amount Using the Annual Loan Constant
Instructions:
Store the following:
NOI in R1
DCR in R2
Number of payments per year in R3
Number of periods in R4
Periodic Interest rate in R5
Program:
Step; Key; Code
001; LBL A; 42, 21, 11
002; 1; 1
003; ENTER; 36
004; ENTER; 36
005; RCL 5; 45, 5
006; %; 43, 14
007; +; 40
008; RCL 4; 45, 4
009; CHS; 16
010; y^x; 14
011; *; 30
012; 1; 1
013; RCL 5; 45, 5
014; %; 43, 14
015; x<>y; 34
016; R↓; 33
017; ÷; 10
018; 1; 1
019; 0; 0
020; 0; 0
021; x<>y; 34
022; ÷; 10
023; RCL 3; 45, 3
024; *; 20
025; RCL 2; 45, 2
026; x<>y; 34
027; %; 43, 14
028; RCL 1; 45, 1
029; x<>y; 34
030; ÷; 10
031; RTN; 43, 32
Examples
Example 1:
NOI: $58,000.00
DCR: 1.25
P/Y: 12
Number of Years: 30
Annual Interest Rate: 5%
Loan Amount: $720,288.92
Example 2:
NOI: $40,000.00
DCR: 1.35
P/Y: 12
Number of Years: 20
Annual Interest Rate: 6.8%
Loan Amount: $323,464.95
Source:
Goldman, Mark H. and Stephen D. Messner "HP 12C Real Estate Applications Handbook" Hewlett Packard Rev. B. March 1984
Eddie
All original content copyright, © 2011-2019. Edward Shore. Unauthorized use and/or unauthorized distribution for commercial purposes without express and written permission from the author is strictly prohibited. This blog entry may be distributed for noncommercial purposes, provided that full credit is given to the author.
Introduction
The program calculates the theoretical loan amount using the following factors:
* NOI: Net Operating Income. The estimated net operating income the property is expected to earn annually. An average is usually used.
* DCR: Debt Coverage Ratio. The ratio of net operating income to annual debt service, describing a company's ability to pay its debts. Generally, the larger the DCR, the better. We really don't want DCR to be below 1.
* Number of payments per year, number of years, and annual interest rate of the potential loan.
The ALC, or the annual loan constant is calculated by:
* Either divided the annual debt service by the loan amount (when the amount is known), or
* Determining the periodic payment to amortize a $100 loan given number of payments and interest rate.
Set up:
Number of payments -> N
Interest Rate -> I%YR (or periodic interest rate -> i)
-100 -> PV
0 -> FV
Solve for PMT
The ALC is expressed as a percentage.
The theoretical loan amount is calculated by:
Loan = NOI / (DCR * ALC%)
HP 12C Program: Loan Amount Using the Annual Loan Constant
Instructions:
Store the following:
NOI in R1
DCR in R2
Number of payments per year in R3
Number of periods in [ n ]
Periodic Interest rate in [ i ]
Program:
Step; Key; Code
01; 1; 1
02; 0; 0
03; 0; 0
04; CHS; 16
05; PV; 13
06; 0; 0
07; FV; 15
08; PMT; 14
09; RCL 3; 45, 3
10; *; 20
11; RCL 2; 45, 2
12; x<>y; 34
13; %; 25
14; RCL 1; 45, 1
15; x<>y; 34
16; ÷; 10
17; GTO 00; 43, 33, 00
(* HP 12C Platinum, step 17: GTO 000; 43, 33, 000)
HP 11C Program: Loan Amount Using the Annual Loan Constant
Instructions:
Store the following:
NOI in R1
DCR in R2
Number of payments per year in R3
Number of periods in R4
Periodic Interest rate in R5
Program:
Step; Key; Code
001; LBL A; 42, 21, 11
002; 1; 1
003; ENTER; 36
004; ENTER; 36
005; RCL 5; 45, 5
006; %; 43, 14
007; +; 40
008; RCL 4; 45, 4
009; CHS; 16
010; y^x; 14
011; *; 30
012; 1; 1
013; RCL 5; 45, 5
014; %; 43, 14
015; x<>y; 34
016; R↓; 33
017; ÷; 10
018; 1; 1
019; 0; 0
020; 0; 0
021; x<>y; 34
022; ÷; 10
023; RCL 3; 45, 3
024; *; 20
025; RCL 2; 45, 2
026; x<>y; 34
027; %; 43, 14
028; RCL 1; 45, 1
029; x<>y; 34
030; ÷; 10
031; RTN; 43, 32
Examples
Example 1:
NOI: $58,000.00
DCR: 1.25
P/Y: 12
Number of Years: 30
Annual Interest Rate: 5%
Loan Amount: $720,288.92
Example 2:
NOI: $40,000.00
DCR: 1.35
P/Y: 12
Number of Years: 20
Annual Interest Rate: 6.8%
Loan Amount: $323,464.95
Source:
Goldman, Mark H. and Stephen D. Messner "HP 12C Real Estate Applications Handbook" Hewlett Packard Rev. B. March 1984
Eddie
All original content copyright, © 2011-2019. Edward Shore. Unauthorized use and/or unauthorized distribution for commercial purposes without express and written permission from the author is strictly prohibited. This blog entry may be distributed for noncommercial purposes, provided that full credit is given to the author.