Calculator Flashcards
Decimals
Gold+disp+4
Payments per year
1+gold+p/yr
Beg/End on calculator
Gold+beg
Nothing is end
N,I, PV,PMT, FV
Number of periods-never negative
Interest-99.5% positive
Present value-most of the time negative or zero
Payment
Future value-never negative and could be zero
PV positive
Amortization ie loans
Number of period+gold+N
All the time except solving for N
Three step tmv problems
Retirement income and college education
Step 1 of TMV for retirement/education-inflating required amount needed for retirement or education
PV-amount needed in todays dollars
Fv-solve for
N-how many years until needed
I-inflation
Step 2 of TMV for retirement/education-lump sum needed
PV-solve for
FV-0
PMT-from answer 1 or FV
N-number of years money is needed
I-real rate
Step 3 of TMV for retirement/education calculation for required funding
PV-0
FV-amount calculated in step 2 or provided
N-amount of periods times savings frequency
I-investment rate
What is Yield to call?
Amount of yield calculated, only if asking for this information
This will be par plus call premium
Use call years, not to maturity years
Yield to maturity
Total amount earned on a bond
Bond intrinsic value
Comparing to another bond
For our bond-Figure out coupon
For their bond-interest rate
Tmv-bond
PV-solve for
FV-par/face value
Payments-interest*par value/payments per
N-number of payment periods
I-coupon rate
Payment periods
RTFQ! Always check for payment periods
IRR or total return
Gain or loss, cash flow, holding period
No payments, solve for i/yr
Calculator essentials
RTFQ!
Clear/reset payment period to 1!
Slow down!
Payment period!
Uneven cash flow or cash flow entry method
Enter 1 for N
CFj
Additional money CFj
IRR-gold, IRR (CST)
CFj or cash flow
All about money coming in and out, not a debt note
The final year calculation for cash flow
1.Sale of proceeds
2.The return of the mortgage(no down payment as that was part of the cash flow)
3.The net operation cash flow
Amortization
1-input
Payments+gold+fv
Mortgage trick for after tax
Early interest-12*payment (round down) times by tax bracket
Subtract by payment
If asking for the 10th year find interest for both 9th and 10th subtract times by tax bracket
Subtract payment
Qualified residence interest
Deductible mortgage interest
Loan not to exceed $750k married/$375k mfs
Existing at $1 million are grandfathered
Home loan to better house okay
Home loan not to better not grandfathered
When should someone be Refinancing?
How long will they be in the home and cash flow capacity
Obtain lower interest rate
Consolidate debt
Change term of the loan
Raise extra cash
Reverse mortgage general rules
-Only available for 62 and up owning condo or single family home
-No income qualifications
-retain title, the borrower lives and owns home
-no mortgage payments
-proceeds are tax free
-payments vary on age, valuation, interest rates, and type of reverse mortgage selected
-a reverse mortgage isn’t paid until they move out
-the repayment amount cannot exceed the value of the home, regardless of the loan balance
-once the loan is repaid, excess is returned to the borrower
-the home does not need to be owned free and clear to qualify for a reverse mortgage
Balloon mortgage
A balloon mortgage is a type of home loan where the borrower makes low or no monthly payments for the first part of the loan term, and then makes a large final payment to pay off the remaining balance