The following is a
formula I wrote using basic algebra for the Hewlett Packard
programmable series
calculator. This formula
substitutes common english terms for the variables.
Usually
a TVM (time value of money) formula includes terms
like PV,
FV, & N (present value, future value & number of
payments).
The following formula uses 5 common terms: Price, Down Payment,
Interest Rate (expressed as a whole number i.e. 8 for 8%), Years
and Payment. The calculator allows you to input any 4 of the variables
and solve for the 5th. So knowing a payment you wish to make and
putting
in the length of loan (i.e. 30 or 15 years), current interest rate
and down payment, the calculator will provide the price of the home
which the payment allows.
The equation can be
programmed into the calculator as follows: |
| [the "/"
key is used as the
divide sign, on the calculator it appears as a "-" with a dot above
and below. The "^" is used to indicate
"raise to the power
of" and in this equation starts with a negative value (minus
key) and on the calculator it is found by pressing the yx function
key] |
PAYMENT~P&I:(PRICE-DWNP)/((1-(1+INT%/1200)
^-(YEARSX12))/(INT%
/ 1200))=PMT$ |
| The formula expanded (do not
add any spaces) |
PAYMENT~P&I:
( PRICE - DWNP ) / ( ( 1 - ( 1 + INT% / 1200 )
^ - ( YEARS x
12 ) ) / ( INT% / 1200 ) ) = PMT$
|