Calculator, HP 12 C, Amortization

Finance Calculator
HP 12C

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. Be sure to adjust the calculator to the END mode from the BEG mode, to do so, press g (blue key) and then END (right hand side above #8 key)

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: f (the yellow key) FIN (third row fourth column, next to the ENTER bar)
Clear previous data: CLX (third row fifth column, next to the ENTER bar)

        Enter Present Value(Starting Balance): PV = -20,000 ( press 20,000, CHS to change the sign and then PV)
        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

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 0, n (first row on the left), reset n to zero to generate a new amortization schedule from the beginning.
11, f (the yellow key) AMORT (above the n key), here we get the cumulative amount for 11 periods altogether.
1, f, AMORT. This is the amount for the 12th period that we are looking for.

Note: For the HP12C, it calculates the acumulative amount for the amortization of 12 periods, that is why we reset the year (n) to zero and get the acumulative amounts for the 11 periods to find out about the 12th period.

The screen should now read 306.38, this is the amount of the payment assigned
to pay off interest.
Press the x arrows y (can be found on the third row fourth column), the screen should now read 478.27, this is the amount of the payment assigned to principle.
Press the RCL (last row, next to the ENTER bar), and then PV, 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 shown above.

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