REFM's HP 12c Calculator Skills For Real Estate

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Real Estate Financial Modeling’s

HP 12c Calculator Skills for Real Estate

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Real Estate Financial Modeling – Model For Success

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REFM HP 12c Calculator Skills Certification

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• Only $29.00• Available online 24/7/365• 15 questions in 30 minutes• Instant Results, Instant Resume Builder!• The test covers a few additional advanced topics, so

you should download our Free Self‐Study Guide to prepare


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• Market Standard since 1981 in:• Real Estate• Finance

• Design standard• Most of the keys are multi‐function• The key functions are color‐coded (white, orange, blue)

• A “reverse” keying order is used, and is a little strange at first

• Negative values reported can be confusing

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HP 12c Overview


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1. Financial Registers

2. Simple and Compound Interest

3. Periodic and Annual Interest Rates

4. Nominal and Effective Interest Rate Conversion

5. Present Value (PV) and Future Value (FV)

6. Net Present Value (NPV)

7. Internal Rate of Return (IRR)

8. Loan APR with Fees

9. Mortgage Pricing

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Today’s Agenda


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Most Commonly Used Keys For Real Estate


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Color‐Coded Formatting Used In Our Materials

• [n] or [X] or [100] = the white default key values

• [f][NPV] = orange values associated with the keys

• [g][END] = blue values associated with the keys


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• What they are:• Dedicated places in the calculator’s memory to store data values for use in an ongoing calculation

• Financial Registers are a subset of the calculator’s overall Storage Registers

• Application: • Recalling values during lengthy calculations

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Financial Registers


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Financial Registers How To


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• What it is:• Interest that is calculated in each period off the beginning of period account balance, where the account balance does not include any interest earned

• 360‐day basis is the default with the 12c

• Application: • To calculate how much interest is being earned by a lender over a specific time period

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Simple Interest on a 360‐ or 365‐Day Basis


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Simple Interest How To


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Simple Interest Example


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Compound Interest

• What it is:• Interest that is calculated in each period off the beginning of period account balance, where the account balance does include any unpaid interest earned

• Application: • To calculate how much interest is being earned by a lender over a specific time period, where interest compounds monthly, quarterly, or annually


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Compound Interest How To

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Compound Interest How To

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Compound Interest Example #1

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Compound Interest Example #2

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Periodic and Annual Interest Rates

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• What it is:• The rate of interest on a loan expressed either annually or in another interval that is more frequent than annually (e.g., monthly)

• Application: • To back solve for what interest rate is needed, given a frequency of compounding, to produce a future value of a given investment amount


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Periodic and Annual Interest Rate How To

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Periodic and Annual Interest Rate Example

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Nominal Rate to Effective Rate Conversion

• What it is:• The annual interest rate in name e.g., “an 8% annual interest rate”

• When interest compounds, nominal rate < effective rate

• Application: • To find out what rate of annual interest one is truly paying on a compounding loan


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Nominal Rate to Effective Rate Conversion How To


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Nominal Rate to Effective Rate Conversion Example


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Effective Rate to Nominal Rate Conversion

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• What it is:• Annual interest rate in name, e.g., “an 8% annual interest rate” is the nominal rate

• When there is compounding, the effectiverate is the actual cost

• Nominal rate < effective rate

• Application: • To find out what rate of nominal annual interest one is paying on a compounding loan


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Effective Rate to Nominal Rate Conversion How To

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Effective Rate to Nominal Rate Conversion Example

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Weighted Average Calculation

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• What it is:• The average of a series of values in which each quantity to be averaged is assigned a weight

• Application: • To find out the average price paid per lot for land to be developed into a housing subdivision


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Weighted Average Calculation How To

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Weighted Average Calculation How To

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Weighted Average Calculation Example

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Discounting Cash Flows: Net Present Value/IRR

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• What it is:• NPV: The net value, in today’s dollars, of an investment opportunity

• IRR: the average annual return on the investment as measured through the final cash flow

• Applications: • To value the acquisition of an existing income‐producing office building or retail plaza; To determine investment performance


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Discounting Cash Flows: NPV How To

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Discounting Cash Flows: NPV How To

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Discounting Cash Flows: NPV Example

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Discounting Cash Flows: IRR Example

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Annual Percentage Rate Calculations with Fees

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• What it is:• APR is the calculated rate for a mortgage that accounts for the cash fees paid by the borrower

• Application: • Calculate exactly what a loan is costing a borrower on an annual basis


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APR Calculations with Fees How To

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APR Calculations with Fees How To

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APR Calculations with Fees Example

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Mortgage Acquisition Pricing

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• What it is:• Mortgages that are sold instead of held by the issuer are typically done so either at a discount or a premium to the remaining principal balance

• Application: • Calculate a mortgage purchase price given a targeted (desired) yield amount


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Mortgage Acquisition Pricing How To

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Mortgage Acquisition Pricing Example

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Mortgage Acquisition Yield

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• What it is:• Mortgages that are sold instead of held by the issuer are typically done so either at a discount or a premium to the remaining principal balance

• Application: • Calculate an expected yield amount for a targeted mortgage purchase price


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Mortgage Acquisition Yield How To

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Mortgage Acquisition Yield Example

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REFM HP 12c Calculator Skills Certification

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• Only $29.00• Available online 24/7/365• 15 questions in 30 minutes• Instant Results, Instant Resume Builder!• The test covers a few additional advanced topics, so

you should download our Free Self‐Study Guide to prepare

REFM's HP 12c Calculator Skills For Real Estate

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