


The Hewlett Packard 17B II 

Is an algebraic financial calculator that will
help solve all financial problems as well as regular arithmetic problems
that you will encounter. 

The HP 17B II is suited for the active Real
Estate Appraiser as well as the
Active Real Estate Broker. 

With a minimum of practice you will find you are
quite proficient with the calculator. 






Example:
You’ve written three checks without updating your checkbook, and
you’ve just deposited your paycheck for $1,053 into your checking
account. If your last known balance
was $58.33 and the checks were written for $22.95, $13.70, and $10 What is
your current balance? 






Try this one:
(3÷4) x (5+6) 











Appraisers and real estate salespersons and brokers are interested in the financial
functions. Once you have worked
enough examples you will be able to completely manipulate loans, savings
accounts, bonds, capitalization problems, future value, present value,
yield capitalization problems, internal rates of returns, financial
management rates of return, any financial function can be solved with these
financial calculators. 





Some of the loan function keys: 



N = Periods in months, years,
quarters, daily semiannually whatever time period
you can think of. 

i = Interest rate. It can be monthly, annually, daily,
semiannually. (HP 17BII = I%Yr) 

PV = The Present Value of whatever you
are trying to find. 

FV = Future Value is used when you
have an annuity, a savings account, a savings account that
you are depleting on a regular basis. Appreciating rents.
The
future value of a building. 




Are looking for one of four elements of a loan. 

99% of errors you encounter are because you
forgot to covert periods. “n” to their actual time, usually months, or “i”
to the time period you need in relation to the time “n”. 

A small percentage of your errors will be
because you forgot to put one of
the numbers, usually the payment in as a negative number. 

One other problem you will encounter when trying
to find the Present Value is that the Present Value will normally be
calculated a little low. You have
to use your wit and round the answer. 




Solving as series of problems will solve all of
your loan solving techniques and get you on your way to solving all
problems. 







There are many times when you will want to find
the loan paydown or the equity buildup.
How much to pay the loan off?
This calculator, as most financial calculators, is designed to give
you the loan payoff at any period of the loan, the interest paid, the
principal paid and the balance. 




We’ll look at at a 30 year loan, in the amount
of $1,500,000 at 7% interest and payable in equal monthly installments of
$9,979.54. The loan is set up on
the calculator like this. 







The previous screen has given you: 

Total Interest Paid Year 1 

Total Principal Paid Year 1 

Loan Balance at the End of Year 1 

NEXT key will give you the same information for
year two, then three and so on. 

TABLE key will give you the opportunity to put
the number of the first payment, the number of the last payment,
increments, and GO will print to an infrared printer if you have one. 




You have a loan for $250,000 at 6.5% interest,
amortized for 30 years and payable in equal monthly installments of
$1,580.17 – when will your loan be paid down to $125,000? How much interest will you have paid? How much principal will you have paid? 





This calculator is a good deal more intricate
than previous calculators. There
are several STEP DOWN menus that you have to know are there. 

I don’t think it’s important to memorize these
step downs. It is important to know
that they are there. 

When you begin doing calculations in any area
you will become aware of map to that function. Indeed you will begin learning new functions of the
calculator that you were never aware of. 




First from the main menu press the Gold key
and press the EXIT above which is the MAIN. When you press the gold key it invokes any functions above
the regular keys that are in gold. 

This takes you to the main menu. You’ll see the following options below
your viewing window. 







When you get to this menu you will press
FIN. 




Once you press the /\ (arrow) under the FIN
Window you will come to this menu: 




Almost all financial calculators give you a
payment option. The payment could
be annually, monthly, weekly, daily, hourly. There are unlimited options for payments. The payments you will normally use are
Payments Per Year and Annual Payments. 




We simply enter 12 press the /\ arrow under P/YR
and the payments per year are set for 12 Payments each year or monthly
payments. 

While your in this screen you should set your
calculator to END mode since your payments will be made at the end of the
period. To set up for END mode
simple press the /\ arrow under the 




Set up your loan as follows: 




When you press the OTHER key you come to this
menu: 




If we want to check the annual performance we
simply press 12 and press the /\ arrow key under #P. 




Now you can display the interest paid during the
periods 1 – 12, the principle paid during period 1 –12, the balance remaining on this $250,000 loan, you
can press NEXT and the calculator will calculate the next 12 periods or
period 12 – 24, finally, if you would like you can print the amortization
schedule for any period by pressing TABLE. 




Press the /\ (arrow) under INT and you’ll see
–16,167.73 that is the interest paid during the periods 1 – 12. 

Now press /\ (arrow) PRIN and you will see –
2,794.31. This is the principal that has been paid during the periods 1 –
12. 

Press /\ (arrow) BAL and you will see
247,205.69, that is the balance left on your $250,000 loan after 12
payments. 

Press /\ arrow NEXT and you will see:
#P=12 PMTS: 13 – 24 the next 12 month period. 




The EXIT key will always take you back to the
previous menu. With the 17BII you
will normally be able to return to any part of a loan that you need to
return to without reimputing the information into the calculator. 




The information from the $250,000 loan should
still be in your calculator. If it
is not then reenter the problem.
From the menu shown below: 




There are several printers that will work with
these infrared sending calculators. 

Hewlett Packard sells a printer and there are
others that are receptive to the infrared message sent from this
calculator. 




The interest conversion menu (ICNV) menu
converts between nominal and effective interest rates. 

Effective rates are used to compare
investments. It is thought that the
Effective Rate is a better yardstick for comparison. 

Personal experience has pointed to the fact that
comparison is nebulous at best. The
main thing is that you compare all investments with the same measuring
stick. 

Still, you have to have a basic familiarity with
the various terms used for the different rates and why they have been
endorsed. 




The nominal rate is the stated annual rate
compounded periodically, such as a $300,000 loan at 9% annually, and paid in equal monthly installments
of $2,413.87. 




This concept can seem strange to us but the
interest is being paid on a lesser amount, or a loan that is being
amortized. 




You have a $250,000 loan at 9% interest, for 30
years, and payable in equal monthly installments of $2,011.56 – this would
be a continuous loan. 




You have the Nominal Rate, you are looking for
the Effective Rate or the APR (annual percentage rate) 




What if you opened a savings account with $25 a
month deposits at 5% interest, compounded daily, on a 365 day year. What will you have in 7 years? 




The cash flow menu (CFLO) menu stores, studies,
and analyzes cash flows. The cash
flows can be paid out (negative) or received (positive), they can be a one
time cash flow or a group of cash flows that are of the same amount. 

First you enter the cash flows as they are. This makes a list of the cash flows with
the proper sequence. From that list
you can find: 

The Total amount of the cash flows
The Internal Rate of Return (IRR) 

The Net Present Value (NPV)
The Net Uniform Series (NUS)
The Net Future Value (NFV)
For a specified periodic interest rate (I%) 




Key Strokes for these Calculations are: 




The sign used for each cash flow calculation is
the same as those used in timevalueofmoney calculations. 

A typical series of cash flows is one of two
types:
Ungrouped cash flows. These occur
in series of cash flows without groups of equal, consecutive flows. Because each flow is numerically or sign
different it is ungrouped. The
number of times each cash flow occurs is once. 

Grouped cash flows. These occur in a series containing “groups” of equal,
consecutive cash flows.
Consecutive, equal cash flows are called grouped cash flows. 




Occur in series of cash flows but none are
sequentially the same. 




The big difference between Ungrouped and Grouped
cash flows is that in Grouped cash flows there are two or more sequentially
identical cash flows. That’s
critical for grouped cash flows, THAT THEY ARE IDENTICAL. 




To use CFLO, be sure your cash flows are
occurring at regular intervals and at the end of each period (should the
cash flow occur at the beginning of the period combine the cash flow and
the cash down payment. 




Grouped Cash Flows
Assume an
investment. We put $100,000 cash
down on an apartment building. We
receive $5,000 in cash flows at the end of year 1, 2, and 3.
$7,000 in cash flows at the
end of years 4, 5, and 6
$10,000 in cash flows at the end of years 7, 8, and 9
at the end of year 10 we sell the building a get $300,000 cash at close of
escrow, our cash flow for that year is $12,000 – What is the IRR? 




From the main menu MAIN takes you to the main menu. 








Calculate the Internal Rate of Return as well as
the Net Present Value of the Following Cash Flows. 

Investment $80,000. Cash flow 1 is $5,000. Cash Flow 2 is $4,500. Cash flow 3 is
$5,500. Cash flow 4 is $4,000. Cash flow 5 is $115,000. 




Press 5,000 INPUT this is only one flow so press
INPUT again. 

Press $4,500 INPUT again only one flow so press
INPUT again. 

Press $5,500 INPUT another single flow so press
INPUT again. 

Press $4,000 INPUT and INPUT again. 

Press $115000 INPUT – Press EXIT and CALC Press
TOTAL and you get the Total cash flows $54,000
Press IRR% and IRR%=11.93 

Press 10.5 I%, then NPV and NPV=4,774.63 Press
NPV and NPV = 7,865.95 




Continuing we get: 

We will now calculate the net present value at
an interest rate of 10.5% if cash flow #4 is reduced to $1,000. 

EXIT this moves you to cash flow #4
Press 1,000 INPUT 

EXIT CALC
NPV 2,762.43 Press IRR% and
you find that the IRR% has changed to 11.33% 

This exercise is to show you that you can
correct or change the cash flows as well as solve the IRR%, NPV, NFV, and
assign an interest rate. 




Investment with grouped cash flows. You invest $9,000, with the promise of
monthly cash flows as shown.
Calculate IRR% and find NPV and NFV at an annual interest rate of
9%. Remember MONTHLY RETURN. 

Clear the cash flow register 

Press 9,000 +/ INPUT and then press
500 INPUT , then 3 and INPUT, then press
1,000 INPUT, then 4, then press
0 INPUT, and press INPUT, then press
1,500 INPUT, then 3 times INPUT then press
EXIT and CALC and
IRR% and you will see
IRR%=1.53 this is the monthly
IRR%.
9 ÷ 12 = 0.75 this
is the monthly periodic rate that you will use to determine the NPV and
NFV.
Press I% to store 0.75 then press
NPV and read 492.95 then press NFV and read 535.18. 






You have an opportunity to invest $15,000. The investment returns quarterly
payments over four years as follows: 

Year 1 4 payments of $ 700 

Year 2 4 payments of $1,200 

Year 3 4 payments of $2,500 

Year 4 4 payments of $3,000 








Real Estate Depreciation at this writing is
limited to Straight Line Depreciation.
Residential Income property is privy to 271/2 year Straight Line and
Commercial/Industrial etc., properties is privy to 39 year Straight Line. 

Other methods of depreciation have been used in
real estate over the years. They
are still used with personal property.
They are worth looking at as they could easily be reintroduced into
real estate investments. 




Straight line is our primary concern. 



Declining balance is another type of
depreciation. 



SumofThe Years’ Digits is a third. 



Accelerated Cost Recovery System. 




BASIS stores the depreciable cost basis
of the asset at acquisition. 

SALV Stores the salvage value of the
asset at the end of its useful life. If there is no
salvage value, set SALV=0. 

LIFE Stores the expected useful life (in
whole years) of the asset. 

ACRS% Stores the appropriate Accelerated Cost
Recovery System percentage from the
published ACRS tables. 

YR# Stores the number of the year for
which you want the depreciation. (1, 2, etc.) 




ACRS Calculates the ACRS deduction based on
BASIS and ACRS%.
(The values in SALV, LIFE, FACT%, and YR# do not
matter.) 

YR# Stores the number of the year for which
you want the depreciation (1, 2, etc.) 

FACT% Stores the decliningbalance factor as
a percentage of the straightline rate. This is for the DB method
only. For example, for
a rate 11/4 times (125%) the straightline
rate, enter 125. 







DB Calculates the decliningbalance
depreciation for the year. 

SOYD Calculates the sumoftheyears’digits
depreciation for the year. 

SL Calculates the straightline
depreciation for the year. 

Arrow down displays the remaining depreciable
value, RDV, after you have pressed or 









You have two children and you estimate that it
will cost you $25,000 a year each, for each of their 5 years in
college. The children are 4 and 5
years old. You estimate that they
will both begin college in 16 years.
You can save money in a savings account earning 3% annually,
compounded monthly. You need to
know how much money you will have to save on a monthly basis. 




This is a begin interest problem. When you put money in a bank the bank
begins paying interest right away, the moment you put the money in the bank
it begins earning interest. 

Clear your calculator and put it into BEGIN
MODE. 

From the Time Value of Money Menu press 










If you leave the $250,000 in the 3% bank account
as you take $50,000 a year, at the beginning of the year, how long will
your $250,000 last? 






