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(12C) (11C) Loan Amount Using the Annual Loan Constant - Eddie W. Shore - 03-07-2019 05:08 AM
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
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
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, 32Examples
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
Link: https://edspi31415.blogspot.com/2019/03/hp-12c-and-hp-11c-loan-amount-using.html