Category Archives: Calculating Appraisers

Band of Investment Formula for the HP 19BII

The HP 19BII does all the 12C does, plus it lets you program re-usuable formulas. Here’s a formula for Band of Investment I wrote several years ago:

To Program the Band of Investment Formula:
1. Press the ON key.
2. Press the key under the “SOLVE” prompt.
3. Find a blank row using the down arrow key and type the following formula exactly as it appears here:
(Remember not to add any spaces, and all of the 0’s after “BAND.OF.INVESTMENT” and before “RO” are zero’s. The lower case “x” is a multiplication sign, not the letter “x”. Use the upper case letter “i”, not the number “1”, in the expression “I%YR”.)

BAND.OF.INVESTMENT:(M%
)x((-12)xPMT((TERMx12)
:I%YR:1:0:12:0))+(1-(M
%÷100))x(RE%)=RO

To Use the Band of Investment Program:
4. Press the key under the “CALC” prompt. If you have entered the program correctly, a new row of prompts will appear: “M%”, “TERM”, “I%YR”, “RE%”, and “RO”. (If not, you need to debug. Check your input for mistakes and make corrections. Then press the “CALC” key again to test the formula.)
5. Now (if you see the prompts listed above) just type each input then press the key under the appropriate prompt. Finish by pressing the key under the “RO” prompt. The calculator will return the correctly calculated Capitalization Rate (Ro).

Try this Example:
Type:70 (70% LTV). Press the key under:M
Type:15 (15 year term). Press the key under:TERM
Type:9 (9% interest). Press the key under:I%YR
Type:10 (10% equity rate). Press the key under:RE
Solve for Cap Rate. Press the key under:RO

Your answer for Ro should be 11.52%.

Reversion Factor Formula for the HP19BII

And yet another program for the HP 19BII:

To Program the Reversion Factor Formula:

1. Press the ON key.

2. Press the key under the “SOLVE” prompt.

3. Find a blank row using the down arrow key and type the following formula exactly as it appears here:

(Remember not to add any spaces, and all of the 0’s after “REV.FACTOR” are zero’s.

REV.FACTOR:PV(YR#:YE%:
0:1:1:0)=REV

To Use the Reversion Factor Program:

4. Press the key under the “CALC” prompt. If you have entered the program correctly, a new row of prompts will appear: “YR#”, “YE%”, and “REV”. (If not, you need to debug. Check your input for mistakes and make corrections. Then press the “CALC” key again to test the formula.)

5. Now (if you see the prompts listed above) just type each input then press the key under the appropriate prompt. Finish by pressing the key under the “REV” prompt. The calculator will return the correctly calculated Reversion Factor.

Try this Example:

Type:3 (third year). Press the key under:YR#
Type:13 (13% yield). Press the key under:YE%
Solve for Reversion Factor. Press the key under:REV

Your answer for REV should be .6931 (set DISP to 4 digits).

Mortgage Constant (Rm) Formula for the HP19BII

And another program for the HP 19BII:

To Program the Mortgage Constant (Rm) Formula:

1. Press the ON key.

2. Press the key under the “SOLVE” prompt.

3. Find a blank row using the down arrow key and type the following formula exactly as it appears here:

(Remember not to add any spaces, and all of the 0’s after “MORTGAGE. CONSTANT” are zero’s. The lower case “x” is a multiplication sign, not the letter “x”.)

MORTGAGE.CONSTANT:(-12
)x(PMT((TERMx12):I%YR:1
:0:12:0))=RM

To Use the Mortgage Constant (Rm) Program:

4. Press the key under the “CALC” prompt. If you have entered the program correctly, a new row of prompts will appear:“TERM”, “I%YR”, and “RM”. (If not, you need to debug. Check your input for mistakes and make corrections. Then press the “CALC” key again to test the formula.)

5. Now (if you see the prompts listed above) just type each input then press the key under the appropriate prompt. Finish by pressing the key under the “RM” prompt. The calculator will return the correctly calculated Mortgage Constant (Rm).

Try this Example:

Type:15 (15 year term). Press the key under:TERM
Type:9 (9% interest). Press the key under:I%YR
Solve for Rm. Press the key under:RM

Your answer for Rm should be .1217 (Set DISP to 4 digits).

Underwriter’s Formula for the HP19BII

Here’s another program for the HP 19BII:

To Program the Underwriter’s Formula:

1. Press the ON key.

2. Press the key under the “SOLVE” prompt.

3. Find a blank row using the down arrow key and type the following formula exactly as it appears here:

(Remember not to add any spaces, and all of the 0’s after “UNDERWRITERS.METHOD” and before “RO” are zero’s. The lower case “x” is a multiplication sign, not the letter “x”.)

UNDERWRITERS.METHOD:M%x
(-12)x(PMT((TERMx12):I%YR:
1:0:12:0))xDCR=RO

To Use the Underwriter’s Program:

4. Press the key under the “CALC” prompt. If you have entered the program correctly, a new row of prompts will appear: “M”, “N”, “I%YR”, “DCR”, and “RO”. (If not, you need to debug. Check your input for mistakes and make corrections. Then press the “CALC” key again to test the formula.)

5. Now (if you see the prompts listed above) just type each input then press the key under the appropriate prompt. Finish by pressing the key under the “RO” prompt. The calculator will return the correctly calculated Capitalization Rate (Ro).

Try this Example:

Type:70 (70% LTV). Press the key under:M
Type:15 (15 year term). Press the key under:TERM
Type:9 (9% interest) Press the key under:I%YR
Type:1.10 (DCR). Press the key under:DCR
Solve for Cap Rate. Press the key under:RO

Your answer for Ro should be 9.37%.

HP 12C PC

Remember this? Do you still use it. I still use mine for checking spreadsheet calculations and other mundane tasks, but I haven’t done a discounted cash flow on it since my last appraisal exam. But I still like having it around.

Well, here’s one that you can get for free, and it resides on your PC desktop. I learned about it from Brian Davis’ terrific blog, Appraisal Scoop. You can get it from Telemark Software’s web site.