hp 12c platinum financial calculator - Appraisal Institute

278 Pages·2005·2.11 MB·English

hp 12c platinum financial calculator
user's guide

H
Edition 4
HP part number F2232-90001
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Printed Date: 2005/8/1 Dimension: 14.8 cm x 21 cm
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ARE PROVIDED “AS IS” AND ARE SUBJECT TO CHANGE
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EXAMPLES CONTAINED HEREIN.

© Copyright 1981, 1982, 1999, 2002-2005 Hewlett-Packard
Development Company, L.P. Reproduction, adaptation, or translation
of this manual is prohibited without prior written permission of
Hewlett-Packard Company, except as allowed under the copyright
laws.

Hewlett-Packard Company
4995 Murphy Canyon Rd,
Suite 301
San Diego, CA 92123
Printing History
Edition 4 March 2005

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Introduction
About This Handbook
This hp 12c platinum user's guide is intended to help you get the most out of your
investment in your hp 12c platinum Programmable Financial Calculator. Although
the excitement of acquiring this powerful financial tool may prompt you to set this
handbook aside and immediately begin “pressing buttons,” in the long run you’ll
profit by reading through this handbook and working through the examples it
contains.
Following this introduction is a brief section called Making Financial Calculations
Easy—which shows you that your hp 12c platinum does just that! The remainder of
this handbook is organized basically into three parts:
(cid:122) Part I (sections 1 through 7) describes how to use the various financial,
mathematics, statistics, and other functions (except for programming)
provided in the calculator:
(cid:122) Section 1 is about Getting Started. It tells you how to use the keyboard,
how to do simple arithmetic calculations and chain calculations, and
how to use the storage registers (“memories”).
(cid:122) Section 2 tells you how to use the percentage and calendar functions.
(cid:122) Section 3 tells you how to use the simple interest, compound interest, and
amortization functions.
(cid:122) Section 4 tells you how to do discounted cash flow analysis, bond, and
depreciation calculations.
(cid:122) Section 5 tells you about miscellaneous operating features such as
Continuous Memory, the display, and special function keys.
(cid:122) Sections 6 and 7 tell you how to use the statistics, mathematics, and
number-alteration functions.
(cid:122) Part II (sections 8 through 11) describes how to use the powerful
programming capabilities of the hp 12c platinum.
(cid:122) Part III (sections 12 through 16) gives you step-by-step solutions to
specialized problems in real estate, lending, savings, investment analysis,
and bonds. Some of these solutions can be done manually, while others
involve running a program. Since the programmed solutions are both
self-contained and step-by-step, you can easily employ them even if you don’t
care to learn how to create your own programs. But if you do start to create
your own programs, look over the programs used in the solutions: they
contain examples of good programming techniques and practices.
3
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4 Introduction
(cid:122) The various appendices describe additional details of calculator operation as
well as warranty and service information.
(cid:122) The Function Key Index and Programming Key Index at the back of the
handbook can be used as a handy page reference to the comprehensive
information inside the manual.
Financial Calculations in the United Kingdom
The calculations for most financial problems in the United Kingdom are identical to
the calculations for those problems in the United States — which are described in
this handbook. Certain problems, however, require different calculation methods in
the United Kingdom than in the United States. Refer to Appendix G for more
information.
For More Solutions to Financial Problems
In addition to the specialized solutions found in Sections 12 through 16 of this
handbook, many more are available in the optional hp 12c platinum Solutions
Handbook. Included are solutions to problems in lending, forecasting, pricing,
statistics, savings, investment analysis, personal finance, securities, Canadian
mortgages, learning curves in manufacturing, options pricing, and queuing theory.
The solutions handbook is available online at the hp 12c platinum website.

HP would like to thank the following for their contribution:

Gene Wright, Lipscomb University, Nashville, TN, USA
and
Tony Hutchins, Wellington, NZ
Jordi Hidalgo, Barcelona, Spain

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Contents
Introduction....................................................................3
About This Handbook.....................................................................3
Financial Calculations in the United Kingdom.....................................4
For More Solutions to Financial Problems...........................................4
Part I: Problem Solving......................................... 15
Section 1: Getting Started ................................................. 16
Power On and Off........................................................................16
Low-Power Indication..............................................................16
Adjusting the Display Contrast.................................................16
The Keyboard..............................................................................16
Keying in Numbers................................................................17
Digit Separators....................................................................17
Negative Numbers................................................................17
Keying in Large Numbers.......................................................18
Backspacing.........................................................................18
The CLEAR Keys....................................................................19
Undo Operation....................................................................20
The RPN and ALG Keys..........................................................20
Simple Arithmetic Calculations in RPN Mode...................................21
Simple Arithmetic Calculations in ALG Mode...................................22
Chain Calculations in RPN Mode...................................................23
Chain Calculations in ALG Mode...................................................26
Parentheses Calculations...............................................................26
Storage Registers..........................................................................27
Storing and Recalling Numbers...............................................27
Clearing Storage Registers......................................................29
Storage Register Arithmetic.....................................................29
Section 2: Percentage and Calendar Functions.................... 31
Percentage Functions.....................................................................31
Percentages in RPN Mode......................................................31
Percentages in ALG Mode......................................................32
Net Amount in RPN Mode......................................................33
Net Amount in ALG Mode......................................................33
Percent Difference..................................................................34
Percent of Total in RPN Mode..................................................35
5
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Percent of Total in ALG Mode.................................................36
Calendar Functions......................................................................37
Date Format.........................................................................37
Future or Past Dates...............................................................38
Number of Days Between Dates.............................................40
Section 3: Basic Financial Functions....................................41
The Financial Registers.................................................................41
Storing Numbers into the Financial Registers............................41
Displaying Numbers in the Financial Registers..........................41
Clearing the Financial Registers..............................................42
Simple Interest Calculations...........................................................42
Financial Calculations and the Cash Flow Diagram..........................44
The Cash Flow Sign Convention..............................................46
The Payment Mode...............................................................46
Generalized Cash Flow Diagrams...........................................47
Compound Interest Calculations.....................................................49
Specifying the Number of Compounding Periods and the Periodic
Interest Rate.........................................................................49
Calculating the Number of Payments or Compounding Periods...49
Calculating the Periodic and Annual Interest Rates.....................55
Calculating the Present Value.................................................56
Calculating the Payment Amount.............................................58
Calculating the Future Value...................................................60
Odd-Period Calculations........................................................63
Amortization...............................................................................69
Section 4: Additional Financial Functions.............................72
Discounted Cash Flow Analysis: NPV and IRR.................................72
Calculating Net Present Value (NPV).......................................73
Calculating Internal Rate of Return (IRR)...................................78
Reviewing Cash Flow Entries...................................................79
Changing Cash Flow Entries...................................................80
Bond Calculations.......................................................................82
Bond Price...........................................................................82
Bond Yield...........................................................................83
Depreciation Calculations.............................................................84
Section 5: Additional Operating Features............................86
Continuous Memory.....................................................................86
The Display.................................................................................87

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Contents 7
Status Indicators....................................................................87
Number Display Formats........................................................87
Scientific Notation Display Format...........................................88
Special Displays....................................................................90
The Key in RPN Mode..........................................................90
The Key in RPN Mode.........................................................91
Arithmetic Calculations With Constants....................................91
Recovering From Errors in Digit Entry........................................92
Section 6: Statistics Functions ............................................ 93
Accumulating Statistics..................................................................93
Correcting Accumulated Statistics...................................................94
Mean.........................................................................................94
Standard Deviation.......................................................................96
Linear Estimation..........................................................................97
Weighted Mean...........................................................................99
Section 7: Mathematics and Number-Alteration Functions.. 100
One-Number Functions...............................................................100
The Power Function in RPN Mode.................................................102
The Power Function in ALG Mode.................................................102
Part II: Programming........................................... 103
Section 8: Programming Basics........................................ 104
Why Use Programs?...................................................................104
Creating a Program....................................................................104
Running a Program.....................................................................106
Program Memory.......................................................................108
Identifying Instructions in Program Lines..................................108
Displaying Program Lines......................................................109
The 000 Instruction and Program Line 000......................112
Expanding Program Memory................................................112
Setting the Calculator to a Particular Program Line...................114
Executing a Program One Line at a Time.......................................114
Interrupting Program Execution.....................................................117
Pausing During Program Execution.........................................117
Stopping Program Execution.................................................122
Section 9: Branching and Looping.....................................125
Simple Branching.......................................................................125

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Looping....................................................................................126
Conditional Branching...............................................................129
Section 10: Program Editing...............................................139
Changing the Instruction in a Program Line...................................139
Adding Instructions at the End of a Program..................................140
Adding Instructions within a Program...........................................142
Adding Instructions by Replacement......................................142
Adding Instructions by Branching..........................................144
Section 11: Multiple Programs............................................149
Storing Another Program............................................................149
Running Another Program...........................................................153
Part III: Solutions..................................................155
Section 12: Real Estate and Lending....................................156
Annual Percentage Rate Calculations With Fees.............................156
Price of a Mortgage Traded at a Discount or Premium....................159
Yield of a Mortgage Traded at a Discount or Premium...................161
The Rent or Buy Decision............................................................163
Deferred Annuities.....................................................................169
Section 13: Investment Analysis..........................................171
Partial-Year Depreciation.............................................................171
Straight-Line Depreciation.....................................................171
Declining-Balance Depreciation.............................................176
Sum-of-the-Years-Digits Depreciation......................................180
Full- and Partial-Year Depreciation with Crossover..........................184
Excess Depreciation...................................................................191
Modified Internal Rate of Return...................................................192
Black-Scholes Formula for Valuing European Options......................194
Section 14: Leasing ...........................................................202
Advance Payments.....................................................................202
Solving for Payment.............................................................202
Solving for Yield.................................................................206
Advance Payments With Residual................................................209
Solving for Payment.............................................................209
Solving for Yield.................................................................212

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Contents 9
Section 15: Savings .......................................................... 213
Nominal Rate Converted to Effective Rate......................................213
Effective Rate Converted to Nominal Rate......................................215
Continuous Rate Converted to Effective Rate...................................216
Section 16: Bonds............................................................. 217
30/360 Day Basis Bonds...........................................................217
Annual Coupon Bonds................................................................222
Appendices................................................................ 227
Appendix A: RPN and the Stack................................... 228
Getting Numbers Into the Stack: The Key..............................229
Termination of Digit Entry.....................................................230
Stack Lift.............................................................................230
Rearranging Numbers in the Stack...............................................230
The Key.....................................................................230
The Key.......................................................................230
One-Number Functions and the Stack...........................................231
Two-Number Functions and the Stack............................................231
Mathematics Functions.........................................................231
Percentage Functions............................................................232
Calendar and Financial Functions.................................................233
The LAST X Register and the Key.........................................234
Chain Calculations in RPN Mode.................................................234
Arithmetic Calculations with Constants..........................................235
Appendix B: Algebraic Mode (ALG).............................. 237
Simple Arithmetic Calculations in ALG Mode.................................237
Keying in Negative Numbers ( ).............................................238
Chain Calculations in ALG Mode.................................................238
The Key in ALG Mode.......................................................239
The History Stack in ALG Mode....................................................239
Parentheses Calculations.............................................................240
Percentage Functions...................................................................241
Percent Difference................................................................241
Percent of Total....................................................................242
The Power Function.....................................................................242
Appendix C: More About L...................................... 243
Appendix D: Error Conditions...................................... 245
Error 0: Mathematics..................................................................245
Error 1: Storage Register Overflow...............................................246

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Error 2: Statistics........................................................................246
Error 3: IRR...............................................................................246
Error 4: Memory.......................................................................246
Error 5: Compound Interest..........................................................247
Error 6: Storage Registers............................................................248
Error 7: IRR................................................................................248
Error 8: Calendar.......................................................................249
Error 9: Service..........................................................................249
Pr Error.....................................................................................249
Appendix E: Formulas Used.........................................250
Percentage................................................................................250
Interest.....................................................................................250
Simple Interest....................................................................250
Compound Interest..............................................................251
Amortization.............................................................................251
Discounted Cash Flow Analysis....................................................252
Net Present Value................................................................252
Internal Rate of Return...........................................................252
Calendar...................................................................................252
Actual Day Basis..................................................................252
30/360 Day Basis...............................................................252
Bonds.......................................................................................253
Black-Scholes Formula for Valuing European Options....................254
Depreciation.............................................................................254
Straight-Line Depreciation......................................................255
Sum-of-the-Years-Digits Depreciation.......................................255
Declining-Balance Depreciation.............................................255
Modified Internal Rate of Return...................................................256
Advance Payments.....................................................................256
Interest Rate Conversions............................................................256
Finite Compounding............................................................256
Continuous Compounding....................................................256
Statistics....................................................................................257
Mean.................................................................................257
Weighted Mean..................................................................257
Linear Estimation..................................................................257
Standard Deviation..............................................................257
Factorial.............................................................................257
The Rent or Buy Decision............................................................258
Appendix F: Battery, Warranty, and Service Information 259
Battery......................................................................................259

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