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Course Title: Using Financial Calculators for Real Estate Applications

MGMT X876.33 Reg. # W8752 2.4 CUE

Office Hours: (818) 912-9105 or email RobertKeller@WarnerCenterRealty.com

Course Description:

This course is designed to help brokers, salespersons, and investors solve practical real estate
problems. Topics include the use of HP-12C and HP-17bII/+ financial calculators to compute
mortgage amortization, income streams, sinking funds, rates of return and yields on investments,
discounted mortgages, and leasehold interests. The discounted cash flow technique, internal rate
of return, and financial management rate of return are considered in detail.

Goals & Objectives:

Students will be exposed to the use of the HP-12C and HP-17bII/+ financial calculators at three
levels of knowledge, each level entering into all course meetings to some degree:

• Concepts: A clear understanding of borrowing, investing, and choosing between financial

alternatives as exchanges of money in time is crucial to comprehending the use of financial
calculators for real estate applications. Here, the course will consider the regular cash flow
functions of present value, future value, compounding, and discounting as well as the
irregular cash flow functions of internal rate of return, financial management rate of return,
and differential cash flow analysis.

• Procedures: The HP-12C and HP-17bII/+ calculators come loaded with enough financial
formulae and computational capability that students do not have to become experts in real
estate finance in order to master their use in real estate applications. Students need only learn
how to operate the calculator as a tool that carries the formulae and performs the
computations necessary for those applications.

• Applications: To illustrate time-value-of-money concepts and calculator procedures, students

will practice real estate loans, APR's, discounted loans, differential cash flow analyses, real
estate investment ratios, and income projections on real estate investments.

Course Texts:

Cane, Ph.D., Edric (1984). The HP-12C Made Easy, Volume I, Edric Cane Seminars.

(1986). The HP-12C Made Easy, Volume II, Edric Cane Seminars.

(1993). Ratios in Investment Real Estate, Edric Cane Seminars.

This course will not be graded. Still, students will be expected to attend all class meetings, to
contribute their questions and expertise, to work handout problems in class, to read assigned
materials, and to do practice problems at home.
Course Outline:

Introduction to the HP-12C & HP17/19 BII: Units 1 and 2 Unit 2: Practice Problems 1-20
basic concepts; real estate loans; Unit 3 pp. 1-10 Unit 3: Practice Problems 1-5
the stack; and basic arithmetic

Time and Money Unit 6 pp. 1-14 Unit 6: Practice Problems 1-6
the time value of money; the rate curve; and Unit 10 pp. 16-17
the six functions of the dollar

Arithmetic, Amortization, and Cash Flow Functions: Unit 3 pp. 16-20 Unit 3: Practice Problems 18-34
arithmetic; amortization/negative; changing loan data; Unit 9 pp. 1-12 Unit 9: Practice Problems 1-8
solving for loan: rate, amount, and term; interest only Unit 4 pp. 8-23 Unit 4 Practice Problems 1-32
and negatively amortizing loans; payment periods; Unit 6 pp. 15-32 Unit 6 Practice Problems 7-20
changing and “balancing the books” on loan data;
compounding; effective yield; converting rates;
appreciation; leverage; and inflation

Looking at Loans from Two Points of View and Unit 5 Unit 5: Practice Problems 1-30
Choosing Between Financial Alternatives: Unit 7 Unit 7 Practice Problems 1-8
discounting loans; APR; cash and cost equivalents;
buy downs; and comparing rates and values

Irregular Cash Flow Functions: Unit 21 pp. 1-13 Unit 21: Practice Problems 1-7
internal rate of return; Unit 23 pp. 1-5 Unit 23: Practice Problems 1-5
multiple cash flows values; and Unit 28 pp. 3-6
financial management rate of return

More Irregular Cash Flow Functions: Unit 21 pp. 14-19 Unit 21: Practice Problems 8-12
present value and future values; Unit 22 pp. 1-11 Unit 22: Practice Problems 1-5
calculating a missing amount; and Unit 23 pp. 9-15 & 17 Unit 23: Practice Problems 6-10
discounted and differential cash flow analyses

Meeting 7 – March 22 Ratios in Investment Real Estate:

Ratios in Investment Real Estate: Chapters 1 and 2 - recommended
gross rent multiplier; cash-on-cash return, net Chapters 3 and 4 - required
operating income; capitalization rate; and
loan constant

Meeting 8 – March 29 HP-12C Made Easy:

Income Projection on Investment Property: Unit 26
five year income property projection form;
completing form; and assessing assumptions