Finance Calculator
HP 10B


Loan Amortization

The loan amortization function is used to find the remaining balance, principle, and interest paid, of a loan with equal end of the month payments.  A 36 month loan with an initial balance of $20,000 and an effective monthly interest rate of 2.00% will be used. 

Step 1 will be to find the amount of the 36 equal monthly payments.

Note:
All the Time Value of Money keys are on the first row of the calculator.
Always press the number first before pressing the Time Value of Money Keys.

Clear time value of money memory: 2^nd CLEAR ALL
Compounding should remain at P/Y=1, C/Y = 1

        Enter Present Value(Starting Balance): PV = -20,000
        Enter Future Value(Ending Balance): FV = 0
        Enter number of periods: N = 36
        Enter interest rate: i(I/YR) = 2
        Calculate unknown: PRESS PMT, answer is $784.657

Another way of doing this problem,
Clear time value of money memory: 2^nd CLEAR ALL (above the INPUT key)
Change the compounding: 2nd, P/YR = 12 (first row fourth column). This is to change from monthly payment to annually payment.

        Enter Present Value(Starting Balance): PV = -20,000
        Enter Future Value(Ending Balance): FV = 0
        Enter number of periods: N = 36
        Enter interest rate: i(I/YR) = 24
        Calculate unknown: PRESS PMT, answer is $784.657

Step 2 will be to find the amount of the 12th payment allocated to interest and the amount allocated to principle.     

To amortize the 12^th payment, press 12, Input, 2^nd, Amort. The screen should read PEr 12-12.
Press and hold down the = key to show which portion of the payment will be displayed first.

The screen should now read 306.38, this is the amount of the payment assigned
to pay off interest.
Press the equal key again, the screen should now read 478.27, this is the amount of the payment assigned to principle.
Press the equal key again, the screen should now read -14,840.95, which is the remaining balance of the loan.
This can be used to find information on any payment in the sequence.   Just repeat the process inputting different period numbers. 

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Last Updated on 1 May 2002, e-mail any comments to: robert.balik@wmich.edu