Appendix B: Formulas Used; Real Estate; Wrap-Around Mortgage; After-Tax Cash Flows - HP 12c Platinum Reference Manual
Hp 12c platinum: reference guide
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Real Estate
Wrap-Around Mortgage
n
= number of years remaining in original mortgage.
1
PMT
= yearly payment of original mortgage.
1
PV
= remaining balance of original mortgage.
1
n
= number of years in wrap-around mortgage.
2
PMT
= yearly payment of wrap-around mortgage.
2
PV
= total amount of wrap-around mortgage.
2
r = interest rate of wrap-around mortgage as a decimal.
FV = balloon payment.
−
PV
PV
2
After-Tax Cash Flows
ATCF
= After-Tax Cash Flow for kth year.
k
Int
= interest for kth year.
k
Dep
= depreciation for kth year.
k
r = appropriate tax rate.
NOI = Net Operating Income.
ATCF
= NOI (1 − r) − 12 x PMT + r x (Int
k
After-Tax Net Cash Proceeds of Resale
CO = capital purchase.
CPR = sales price − closing costs.
r = marginal tax rate.
c= capital gains tax rate.
NCPR = CPR − remaining balance of mortgage.
ATNCPR = NCPR − r x (Total Dep. − SL Dep.) − c x (CPR − CO + SL Dep.)
Formulas Used
(
−
+
PMT
1
1
2
=
1
r
= NCPR − [c x (CPR − CO) + r x (Total Dep.) +(c − r) x (SL Dep.) ]
Appendix B
−
)
n
−
r
PMT
1
2
1
−
+ Dep
k
155
−
(
)
n
+
1
r
1
(
+
FV
1
r
).
k
)
−
n
+
r
2
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