MATH CLASS 1
GOBC Real Estate • Mortgage Notes
Please have HP10bII Calculator for this class
www.GOBCrealestate.com
MATH CLASS 1
Payment
N = Time x P/YR Interest Rate Present Value
Always negative!
N represents the total number
of compounding periods over
the life of the loan
# of years x P/YR Future Value
(compounding periods/yr)
Always negative!
IF there are payments then: #
of years x # of payments.
**Example: 25 yr amort with Periods per year
12 compounding periods per
year (monthly pmt):
N = 25 x 12 = 300 total
compounding periods
Shift – to get to orange keys
To set up calculator:
Shift DISP 9
Shift ,/.
Shift BEG/END
©2022 GOBC Training LTD 2
MATH CLASS 1
INTEREST J – Nominal Rate (Rate for the whole year - all compounding periods!)
8% per annum (year) - rate for the whole year
𝑖 – Periodic Rate (Rate per compounding period)
comp. Annually J = 8%
𝐽%
periodic rate =
𝑐𝑝
= = ______% 𝑖𝑎 = _____
comp. Semi-annually J = 8%
𝐽%
periodic rate =
𝑐𝑝
= = ______% 𝑖𝑠𝑒 = _____
comp. Quarterly J = 8%
𝐽%
periodic rate = = = ______% 𝑖𝑞 = _____
𝑐𝑝
Numbers Letters
Practice:
J =% Annual i =% Calculate the monthly payment
for the following mortgage:
J =% Semi-annual i =%
Amortization: 20 years
I/YR: J12 = 14%
J =% Quarterly i =% Principal (PV): $40,000
FV = 0 +/-
Enter from TOP ----> DOWN:
J =% Monthly i =%
20 x 12 N
14 I/YR
J =% Bi-weekly i =% 40,000 PV
? PMT
0 +/- FV
J =% Weekly i =% 12# P/YR
PUSH PMT = 497.4083… +/-
J =% Daily i =%
©2022 GOBC Training LTD 3
MATH CLASS 1
LOANS
EXAM QUESTION:
The risk on the graduated mortgage comes from:
A. The increasing indebtedness occurring in the
initial years of the loan
B. The decreasing size of the payment over time
1) Only A is true
2) Only B is True
3) Both statements are true
4) Neither statement is true
©2022 GOBC Training LTD 4
MATH CLASS 1
Remember PMT and FV always negative!!!
1. James wants to invest $8,000 at an interest rate of 10% per annum, compounded annually. How much
money would he have in his bank account in 5 years?
N J =
IYR PMT =
PV
PMT
FV
#PYR
2. Melissa wishes to purchase a boat in 6 years. It will cost her $20,000. How much must she invest now, if
interest rates are 9.5% per annum compounded semi-annually?
N J =
IYR PMT =
PV
PMT
FV
#PYR
3. Mike arranged an interest only loan of $12,500 for 5 years. The loan carries an interest rate of 16.5 % per
annum, compounded monthly, and requires monthly interest only payments. The amount of those
payments are?
N J =
IYR PMT =
PV
PMT
FV
#PYR
©2022 GOBC Training LTD 5
MATH CLASS 1
Conversion of Interest Rates (Going from one J to another J)
EXAMPLE:
𝑱𝟐 = 10 – contract rate with semi-annual compounding (what you have)
PMT = 12 – monthly payment frequency (what you need)
Here, the comp freq is twice per year and the pmt freq is monthly. To make sure the proper amount of interest
dollars is charged to the borrower, we must change the comp freq on the interest rate to match the frequency of
the payments. So, we do an NPEPN!! The result of the NPEPN is that the converted NPEPN rate calculates the same
amount of interest in dollars as the contract rate would have! No change in INTEREST AMOUNT charged but just in
how it is calculated.
= = =
10.25% 10% ?% 9.7978…%
𝑱𝟓𝟐 = 6.5% (contract rate), with quarterly payments
Pmt = _______
𝑱𝟏𝟐 = 11.75% (contract rate), with annual payments
Pmt = _______
©2022 GOBC Training LTD 6
MATH CLASS 1
𝑱𝟑𝟔𝟓 = 16% (contract rate), with semi-annual payments
Pmt = _______
𝑱𝟒 = 20% (contract rate), with monthly payments
Pmt = _______
4. Sam and Sally recently negotiated a 2nd mortgage in the amount of $24,000 at an interest rate of 19% per
annum, compounded semi-annually. The loan is to be amortized over twenty years by equal monthly
payments. What is the size of the monthly payment to be made by Sam and Sally?
N J =
IYR PMT =
PV ______# NOM
PMT ______# PYR
FV ______# EFF
#PYR ______# PYR
______# NOM
©2022 GOBC Training LTD 7
MATH CLASS 1
NPEPN PRACTICE:
J2 = 5 J 52= 4 J 12= 5
Pmt = Pmt = Pmt =
(monthly pmt) (daily pmt) (annual pmt)
# NOM # NOM # NOM
# PYR # PYR # PYR
# EFF # EFF # EFF
# PYR # PYR # PYR
# NOM # NOM # NOM
= 4.9486…. = 3.9986…. = 5.1161….
J 365 = 10 J4 = 18 J2 = 8
Pmt = Pmt = Pmt =
(quarterly pmt) (bi-weekly pmt) (weekly pmt)
# NOM # NOM # NOM
# PYR # PYR # PYR
# EFF # EFF # EFF
# PYR # PYR # PYR
# NOM # NOM # NOM
= 10.1246… = 17.6665… = 7.8500….
©2022 GOBC Training LTD 8
