User Manual

74 Other Financial Tools
BEAR-CH3.DOC BA Real Estate Guidebook Bob Fedorisko Revised: 08/29/96 9:19 AM Printed: 09/28/99 1:21 PM
Page 74 of 20
To calculate APR, first enter the term and loan amount in
the TVM model. Then press
N
to start the model, and
enter the appropriate values when prompted. You can exit
the APR model at any time by pressing
!
.
Name Meaning
I% =
The annual (nominal) interest rate of the loan.
PTS=
The number of points charged.
FEE=
The total fees (such as refinancing fees)
charged.
APR=
The true annual percentage rate.
Note: Although the calculator proposes the same interest
rate that is stored in the TVM I% value, entering I% in this
model does not change the TVM I%.
Assuming a $125,000 loan, 8% fixed-term interest, 30-year
term, and miscellaneous loan fees of $2,000 plus 2 points,
find the APR.
Steps Keystrokes Display
Clear TVM values.
#
-
0.00
Set P/Y and C/Y to 12.
#
+
12
j
j
P/Y = 12.00
C/Y = 12.00
12.00
Enter the term.
30
0
TRM= 30.00
Enter loan amount.
125
q 2
LN = 125,000.00
Start APR.
N
I% = 0.00
Enter interest rate.
8
j
I% = 8.00
Enter points.
2
j
PTS= 2.00
Enter total fees.
2000 FEE 2,000
V
iew actual APR.
j
APR= 8.39
Annual Percentage Rate (APR)
You can compute the true APR of a transaction, taking
into account the points and fees charged.
APR Values
Situation
Solution