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AmortizeIt! The Complete Amortization Solution (Shareware Edition) (Printed Manual for) (Registered Users has Sample Screen Shots) Pine Grove Software 67-38 108th Street, Suite D-1 Forest Hills, New York 11375 (800) 242-9192 (718) 575-9192 COPYRIGHT NOTICE (c) 1990, 1991 by Pine Grove Software, All Rights Reserved. AmortizeIt! is copyrighted software and as such is protected by the laws of the United States. You may distribute a shareware version (version 1.1d) of this software to others but you may not sell it. If you are a distributor of shareware software, you may charge up to $6 for your disk duplication services. This product may NOT be distributed along with any other product that is being sold for profit without the expressed, prior written permission of Pine Grove Software. SOFTWARE LICENSE AGREEMENT The registered user of AmortizeIt! is entitled to make backup copies of the software for the sole purpose of protecting his investment. This license allows you to use one copy of AmortizeIt! on one computer at a time. You may use your copy of AmortizeIt! on different computers provided that there is NO POSSIBILITY of it being used on two computers at the same time. Do not confuse this copyright notice with the user supported method of distribution. If you use this program, you are honor bound to pay the licensing fee. The method that we choose to use to distribute version 1.1d of this software is simply on a "try-before-you-buy" basis. AmortizeIt! is NOT FREE SOFTWARE. And if you paid a fee to anyone other than Pine Grove Software (or an authorized retail distributor), you did not pay for a license. (NOTE: version 1.1(B,C) or 1.11 is specifically not to be dis- tributed via the shareware method.) If you have any questions concerning this license agreement, please call us at (800) 242-9192 or (718) 575-9192. i WARRANTY While these routines are easy to use, financial planning requires careful study. Therefore, Pine Grove Software specifi- cally disclaims all warranties, expressed or implied, including but not limited to, implied warranties of merchantability and fitness for a particular purpose or use. In no event shall Pine Grove Software be liable for any loss of profit or any other commercial damage, including but not limited to, special, inci- dental, consequential, or other damages. We suggest that you obtain professional guidance when making any major financial decisions. We are NOT responsible for your interpretations of the results obtained with these routines, even if it is shown that there is an error in the programming of a routine. While great care has been taken with regards to the accuracy of these routines. And the results that these routines produce have been checked against a number of sources, it is still possible that you may get different results than what you had expected. Some of these differences are caused by internal rounding of the calculations (usually off by no more than 1/10 of 1% over say 20 years), by the way interest and periods are calculated, by an error in using the program, or by possibly, in an extreme case, by an error in programming. Therefore, when using this program, please use common sense. And if you are about to make what could be for you an important financial decision, triple check the results obtained with this or any calculator. ii TABLE OF CONTENTS COPYRIGHT NOTICE . . . . . . . . . . . . . . . . . . . . i LICENSE AGREEMENT . . . . . . . . . . . . . . . . . . . . i WARRANTY . . . . . . . . . . . . . . . . . . . . . . . . ii INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . 1 INSTALLING AMORTIZEIT! . . . . . . . . . . . . . . . . . 2 INITIAL INSTALL . . . . . . . . . . . . . . . . . . . . . 3 STARTING AMORTIZEIT! . . . . . . . . . . . . . . . . . . 4 SELECTING FROM THE MENUS . . . . . . . . . . . . . . . . 5 IMPORTANT KEYS . . . . . . . . . . . . . . . . . . . . . 6 HELP WITH HELP . . . . . . . . . . . . . . . . . . . . . 9 ENTERING/EDITING INFORMATION . . . . . . . . . . . . . . 10 THE ROUTINES OF AMORTIZEIT! . . . . . . . . . . . . . . . 11 LOAN CALCULATOR . . . . . . . . . . . . . . . . . . . 11 AMORTIZATION ROUTINE . . . . . . . . . . . . . . . . . 12 REMAINING BALANCE . . . . . . . . . . . . . . . . . . 18 BALLOON PAYMENT . . . . . . . . . . . . . . . . . . . 19 ACCELERATED PAYMENT . . . . . . . . . . . . . . . . . 20 INTEREST DUE . . . . . . . . . . . . . . . . . . . . . 22 THE QUESTIONS . . . . . . . . . . . . . . . . . . . . . . 24 FILES . . . . . . . . . . . . . . . . . . . . . . . . . . 28 FILE STRUCTURE . . . . . . . . . . . . . . . . . . . . 28 SOME RELATIONSHIPS BETWEEN THE ROUTINES . . . . . . . . . 30 APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . 34 ALLOWABLE TOTAL PERIODS . . . . . . . . . . . . . . . 34 MESSAGES . . . . . . . . . . . . . . . . . . . . . . . 35 PRINTING TO DISK . . . . . . . . . . . . . . . . . . . 36 LOCAL MENUS . . . . . . . . . . . . . . . . . . . . . 37 SETTING OTHER OPTIONS . . . . . . . . . . . . . . . . 41 PINE GROVE SOFTWARE . . . . . . . . . . . . . . . . . 44 OTHER PROGRAMS . . . . . . . . . . . . . . . . . . . . 45 SUBSCRIPTION . . . . . . . . . . . . . . . . . . . . . 46 REFERENCES . . . . . . . . . . . . . . . . . . . . . . 47 COMING FEATURES . . . . . . . . . . . . . . . . . . . 48 INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . 49 iii INTRODUCTION Thank you for selecting AmortizeIt!, The Complete Amortization Solution. We believe that you have chosen a program second to none in its application class. AmortizeIt! performs more calculations faster and with less effort than any other program we have seen. AmortizeIt! is easy to use. There is never any programming needed to solve a problem. All you have to do is answer each question in a routine and press <F9> and, in most cases, the results will be displayed instantly. Much of what is found in this manual is also available through the program's help function. If you do get stuck at any time, press the <F1> key and a detailed help window will be displayed. If you are at the main menu and need information about a routine, simply highlight the routine's name and press <F1> and a description of the routine will be displayed. Since the help system is so extensive, much of this manual is used to discuss how these routines can be used. After we review several of the basics of the program, we will discuss the inter- relationships of the routines that may not be so obvious. These examples are not meant to be exhaustive. Rather they are meant to illustrate several ideas and to get you thinking about the power of the program that you are about to use. One final item. Like all software publishers, we hope that you take the time to at least browse through the manual. No matter how easy a program is to use, you will undoubtedly learn something by doing this. We want you to get the most from our software as you possible can. 1 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software INSTALLING AMORTIZEIT! on a Hard Disk from a 5.25" Original AmortizeIt! is easy to install. It is not copy protected. (We ask that you respect our license agreement which states that you can only use a copy of AmortizeIt! on one machine at a time.) The program, as it is distributed on 5.25" disks, is compressed in order to save disk space. Therefore, the program can not be run from the original disk. To prepare for use, follow these steps (we assume you are putting the program on a hard drive): Type this: Press This: Comments: Place the original AmortizeIt! disk in drive A: (or B:) c: <enter> log on to the hard drive, your hard drive may be a different letter cd \ <enter> change to the root directory md Amort <enter> make a directory for AmortizeIt! cd \Amort <enter> make the AMORT directory the default directory copy a:*.* <enter> copy all files from the distribution disk to your hard drive if you put the original disk in drive b: change the a: to b: in this step AMORT <enter> this is the decompress step Amortize <enter> this starts the program so you can set it for your system during this step, you will enter your name and tell the program if you have a color monitor. When you are done press <F9> and you will exit Amortize <enter> The program starts with this command INSTALLING AMORTIZEIT! on a Hard Disk from a 3.5" Original: Follow the steps above, except ignore the "AMORT" command. As the program is distributed on a 3.5" disk it does not need to be decompressed. NOTE: AmortizeIt! can only be run from a hard disk or a floppy disk with 720k (3.5") capacity or higher. 2 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software INITIAL INSTALL This step assumes all files are decompressed and that Amort- izeIt! is on your hard drive or a working copy is on a 720k capacity or higher diskette. If this is not the case see "In- stalling AmortizeIt! on a Work Disk." The first time you run AmortizeIt!, you will be asked to enter your name and to tell the program whether or not you are using a monochrome monitor or a color monitor. Simply enter the name that you will want to have printed on the reports and answer the question "Y" or "N" as to whether or not you see colors on your screen. Once you are have done this, press <F9> to set the software for your computer. Now, restart the program. With some versions of the program, you may be also asked to enter the current date. If you are asked to do this, the date must be entered in a MM/DD/YY format. Please be sure to set the correct date so that AmortizeIt! can do it's date calculations correctly. 3 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software STARTING AMORTIZEIT! If you have installed AmortizeIt! on a hard drive according to the instructions under "Installing AmortizeIt! on a Work Disk", change to the drive that you loaded it on. For example, if AmortizeIt! is on drive c: do the following: Enter: Comment: c: changes to drive AmortizeIt! is on if you have loaded it on another drive substitute the appropriate drive letter cd \Amort change to the suggested directory that A- mortizeIt! is in Amortize this starts the program or Amortize /G when program starts, initial graphics screen is suppressed or Amortize /I starts AmortizeIt! in install mode so that you can customize settings 4 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software SELECTING FROM THE MENUS When the program starts you will see the AmortizeIt! logo. You may pass by this screen quickly by pressing the space bar. Once you have done this you will see the opening menu. This menu is refereed to in this manual as the main menu. You may pick a menu item two ways. You may use your cursor keys to move the highlight bar up and down. When the bar is over the menu item that you want, press <Enter>. Or secondly, you may type the highlighted letter (or capital letter) of a menu item and that item will be selected. While the cursor bar is on a menu item, if you press <F1> a help window will describe what the routine does. See also the appendix for a diagram of the menu structure. In addition, see "Local Menus", else where in this manual. 5 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software IMPORTANT KEYS Throughout the AmortizeIt!'s instructions and help screens, you will see symbols such as <F1> or <Esc>. This means, find the keys on your keyboard that have an F1 or Esc written on them and press them to activate the feature. Often you will also see a symbol such as <^Y>. This means to hold the <Ctrl> key while pressing the <Y> key. The technique is like using the shift key to produce a capital "Y". This symbol <^Y> is called "Control Y". While the help lines at the bottom of a routine's screen will remind you about some of the keys that you may use at any given moment, it is impossible to list all of the keys available. It is VERY IMPORTANT for efficient use of AmortizeIt! to remember the options that are available to you. In selected fields, these keys will produce the following: <Esc> exits what you are doing and restores the original value to the field. This is the "I don't want to be here key!". This is particularly useful when printing. <F1> brings up the help system. Press <F1> a second time and you will see a help index. Use the cursor keys to high light a topic of interest and then press <Enter> to display the help informa- tion for that topic. <F2> (File Key) saves and retrieves client data. <F3> starts printing. In some routines you will have the option of sending the report to the printer, disk drive or screen. When appropriate, simply select the destination from the menu. <F4> sends a line feed to the printer. Use this key (rather than the line feed on the printer) to advance the paper so that you can have the desired spacing between the print outs for the routines. NOTE: By using this key instead of the printer's line feed key, you will keep the program's internal line counter synchronized with the printer. This will prevent a print out from being split across two pages. 6 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software <F5> sends a form feed to the printer. This will eject the current page and IF the paper has been correctly set in the printer, it will align the printer to print at the top of the next sheet of paper. Use this key INSTEAD of the form feed button on the printer. (See the note on the <F4> key.) <F9> performs the action. Usually calculates. While in copy mode, it performs the copy. When a screen is asking you for informa- tion, such as before a printout, <F9> is used to complete the data input. (Consider this to be the "DO-IT!" key.) <F10> Local Menu. When the cursor is on selected input fields the user will have access to local menus via the <F10> function key. Some of these local menus are: Extra Payments, Fiscal Month and Additional Interest Rates. Watch the help lines at the bottom of a routine's screen to know when <F10> is an option. <tab> moves the cursor from one field to the next field. <shift><tab> moves the cursor back one field. <PgUp> moves the cursor to the top of the column. <PgDn> moves the cursor to the bottom field of the column. <^PgUp> moves the cursor to the first field on screen. <^PgDn> moves the cursor to the last field on screen. <^Y> clears the field. That is, it deletes the contents of a field. If you are having trouble entering data and AmortizeIt! is beeping at you, try clearing the field using <^Y>. Then start entering the data again. <^R> restores the original contents of the field <Home> moves the cursor to the beginning of the field. <End> moves the to the end of the field. <^ > (Ctrl left arrow) moves cursor a word at a time to the left. <^ > (Ctrl right arrow) moves cursor a word at a time to the right. <Del> deletes character at the cursor. <BackSpace> deletes character to left of the cursor. 7 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software <^Home> deletes from beginning of subfield to cursor. Example: When entering a date in the 'MM/DD/YY' format, using <^Home> while on the second 'D' of the 'DD' part of the date will delete just the 'DD' part of the entry. In other words, the 'DD' is the subfield. <^end> deletes from cursor to end of the subfield. This is the opposite of the <^Home> key. <^T> deletes word to right of the cursor. <Ins> toggles insert mode on and off. <Alt><F1> will display the previously called help topic. 8 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software HELP WITH HELP Press the <F1> key at any time to bring up a context sensi- tive help window. If <F1> is pressed again when help is being displayed, a list of help topics will be shown. You may use the cursor keys to move to any topic. Press <Enter> and then help on that topic will be displayed. <Alt><F1> will display the previously called help topic. <Esc> will exit a help window. While in some help windows, one or more related help topics may be shown. Use the cursor to move the highlight bar to one of these topics and press <ENTER> to read the help information on the related topic. Also, always note the bottom right corner of the help window to see if there is additional help information. This will be indicated by the PgUp/PgDn indicators. 9 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software ENTERING/EDITING INFORMATION There are three basic types of data or information that AmortizeIt! will allow you to enter. The first data type is numeric. Simply enter the appropriate value and press enter. If you need to clear a value press <Y> while holding the <Ctrl> key. <^Y> The second type of entry is a date type. Enter any valid date in a MM/DD/YYYY format. Do not type in the </>'s. The program provides them automatically. Also, with a date you can use the <Tab> key to move to any one of the three fields (month, day or year). Once at a field, enter the correct value and press enter. When in the year field, it is possible to enter just the last two years of a date and AmortizeIt! will fill in the missing first two numbers if the year is in this century. In the month or day field it is NOT necessary to supply a leading zero. You may enter 2 for February. You do not need to enter 02. If you use this technique, you must move to the next field by pressing the <Tab> key. NOTE: If you do not enter a valid date, AmortizeIt! will beep when you press enter. The third data type is when you are limited to a few specific choices. An example of this is Compound Period in the loan table routine where the range of input is limited to 8 or so choices. To change from one acceptable value to another, press either the <space bar> or the dark gray <+> or <-> keys located on the right side of the keyboard. Once the correct value is selected, you may move on to the next field by pressing <Enter> or using the appropriate cursor key or the <Tab> key. 10 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software THE ROUTINES OF AMORTIZEIT! *** IMPORTANT *** There are many questions or inputs that are common to several routines. For example, Compounding Period needs to be set in many of the routines. An explanation of questions that are used in more than one routine are explained in the section of the manual under the heading "The Questions". This section of the manual looks at what a routine does and the questions unique to that routine. LOAN CALCULATOR The Loan Calculator routine will solve for any one of the following: Amount of Loan, Total Payments (term), Annual Rate or Periodic Payment. Enter the known values for any of the three and 0 (that is the number "0" not the letter "O") for the unknown. Press <F9> to calculate. The payment method may be either payment in advanced or payment in arrears. To change, move the cursor to that field and press the space bar. Payment and compounding periods may be set the same way. While the calculator will solve for the annual rate it is technically an approximation. There is no mathematical formula to solve for rate and therefore it must be accomplished via interpo- lation. To see how close the result is, repeat the problem, but use the rate that AmortizeIt! suggests and enter a zero (0) for Periodic Payment. Press <F9> to calculate. If the payment does not change, then the interest rate calculation was very accurate. If is reasonable to expect that the payment amount will change by several cents. NOTE: While solving for the rate, it is possible for Amort- izeIt! to take longer than other calculations. Therefore it will display intermediate results. WAIT FOR THE ASTERISK TO APPEAR TO BE SURE THAT THE CALCULATION IS DONE. NOTE: The compounding period must be either shorter in dura- tion or equal to the payment period. 11 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software AMORTIZATION ROUTINE AmortizeIt! will display a classical loan table. That is, it will show how each payment is applied to interest and principal. You can display a table for a loan year, calendar year or a fiscal year. The table will calculate a total for payments, interest and principal for both the year displayed (YTD Totals) and from the beginning of the loan through the last payment of the particular year (Running TTLS). Enter loan data as you do for all routines. See the section "The Questions" for an explanation of the inputs that are common to other routines. The following inputs are uniquely applicable to the Loan Table. Payment Method A loan may be calculated using one of two payment methods, Payment in Arrears or Payment in Advanced. Payment in Arrears is the most common method of payment calculation. Simply stated, payment in arrears is when the first payment is due exactly one pay period after receipt of the borrowed funds. Since there was use of the funds for that one period, interest is due for that period when the first payment is made. Payment in Advance is when the first payment is due on the first day that the funds are available (origination date of the loan). Therefore, since there has been no use of the funds when the first payment is made, the entire first payment is applied toward reducing the principal. Leases are usually written using the payment in advance method. Display Year AmortizeIt! can be set to display an amortization table by the loan year, calendar year or fiscal year. A loan year is used to see the cost of the loan for any complete 12 month period from the first payment date. A fiscal year display is used to coincide the display with a tax year. If a tax year is the calendar year, use the calendar year display. To set the FIRST month of a fiscal year, press <F10> and select the month from the menu by typing the capital letter in the month's name or move the bar to the month's name by using the up and down cursor keys and then select by pressing <Enter>. 12 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software Amortizing Method There are 5 ways that AmortizeIt! can apply a payment. Normal is the most common method used for a mortgage. It is also known by the names of Equal Payment or Level Payment Mortgage. Under the normal payment method the payment amount is the same (except *for possibly the last one) for the duration of the loan as long as the interest rate does not change. Under the US Rule the payment amount is the same and payments are applied in exactly the same way as under the normal method EXCEPT when interest is being accrued (during negative amortiza- tion). The US Rule does not allow for interest to be charged on accrued interest. The Rules-of-78 applies interest faster than the normal method. This is often used by banks for short term consumer loans on items such as cars. NOTE: When payments are made on schedule for the entire duration of the loan, the total interest paid will be the same whether the Rules-of-78 or the Normal method is used. The Fixed Principal Method applies the same amount of each payment to the principal. The payments get smaller as the princi- pal is paid down and less interest is due for each period. The Interest Only Method calculates a payment amount so that only the interest is paid on the loan up until the last payment is due. At that time a balloon is due equal to the original amount of the loan plus the last period's interest. Days Per Year Payments and amortization may be calculated using either a 360 or a 365 day year. The 360 day year is the most commonly used value, and this is the default for AmortizeIt!. This setting only affects the results when compounding is set to daily. 13 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software Annual Rate The value that is enter will be the effective rate for the entire loan unless <F10> is pressed to change the rate for different periods. CAUTION: Entering a rate in this field will NOT set that rate for the entire loan unless this is the first time a rate is being entered. To set the same interest rate for the entire term of the loan, press <F10> and select Paid Interest Rate from the menu. If you pick FIXED from the next menu, you will be prompted to cancel all adjustable rate entries. HINT: If you need to enter additional (adjustable) rates, enter those rates BEFORE filling in this field by pressing <F10>. This saves you the trouble of entering a rate, pressing <Enter> and then finding yourself in the Amount of Loan field. However, if you are in the Amount of Loan field and wish to go back to Annual Rate field, hit the UP arrow. Extra Payments Applied Toward Principal To enter extra payments, press <F10> while being asked for the Amount of Loan. You will be shown a menu that will give you the opportunity to enter extra payment amounts annually on the anniversary date of the loan OR periodically when any payment is made. Make the appropriate selection. Then using SolveIt's standard editing techniques, enter any extra payments that are made. Press <F10> while entering extra payments, to copy an extra payment over several consecutive payment periods. This is much faster than keying in a regular extra payment. If you want to pay an extra $100 every payment period, enter the $100 amount, then enter the first period that it will be paid in and the final period that you expect to make the payment in. Press <F9> to execute the copy over the periods. A word of CAUTION. If you enter an extra payment for the last period of the loan when the REGULAR PAYMENT is equal to or greater than the remaining balance, it will confuse AmortizeIt!. AmortizeIt! will not understand why you want to make an extra payment when the regular payment would be more than the remaining balance. (And in fact, neither can we.) If you did this, simply adjust the extra payment. Of course this method can be used to zero out extra payments. Setting the Payment Amount 14 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software Using the above procedure for entering extra payments, you can set any payment you want to use to amortize the loan. For example, suppose AmortizeIt! calculates a monthly payment of $835.50 and you want to amortize a loan using an $800 payment instead. Enter -$35.50 in the extra payment fields (use the copy feature to copy it across all periods) to reduce the monthly payment to $800. This is the technique used to display an amortization sched- ule with a balloon payment. Use the Balloon Payment routine to calculate the needed periodic payment. Then return to this routine and enter the DIFFERENCE between what the Loan Table calculates and what the Balloon Payment routine calculates. Once all data is entered press <F9> to calculate and display the loan table. 15 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software The Loan Table Display WHEN A TABLE IS DISPLAYED, pressing the <Esc> key will exit the routine. Pressing <R> will allow you to enter new or edit existing data. Pressing <N> will display the next year. If you are at the last year pressing <N> will redisplay the first year. Pressing <A> will allow you to display any year. When prompted enter a four digit year. For example 1990 or 2001. The <S> key will open a summary window. You can summarize the loan through any period. See Summary Window below for details. WHEN A LOAN TABLE IS DISPLAYED, you can print a schedule for any range of periods by pressing <F3>. Just follow the on screen prompts. Also, all data for a loan can be saved by pressing <F2>. When an asterisk (*) appears in the payment column, that indicates that an extra payment was made on that payment date. When an asterisk (*) appears in the date column, that indi- cates that the interest PAYMENT changed on that date. NOTE: If the loan is calculated in arrears, then the RATE actually changed on the preceding payment date. Negative Amortization Negative Amortization occurs when the payment being made does not cover the interest due for the period. The amount owed is growing. (If you are using normal amortization, interest is charged on accumulated interest. If you are using the U.S. Rule, then interest will not be charged on accumulated interest.) Negative Amortization most often occurs during the early years of a mortgage. Banks will make a loan and collect interest based upon a lower rate than what is actually being charged. This gives them a competitive edge and allows the borrower to make a lower payment during the early years of a loan. All the while though, interest is accruing (the balance is growing) due to the artificially low rate. To amortize a negative loan, you must first enter both the Paid Rates and the Accrued Rates (see below). The paid rate is the LOWER rate that the payment is actually being based upon. The Accrued Rate is the HIGHER rate that is actually being charged. (For a negative amortizing loan, the rates would never be fixed.) Once both the accrued and paid rates are entered, the loan is ready to be amortized. Hit <ESC> once from either rate entry screen and you will be back at the main AmortizeIt! screen. Press <F9> to calculate. 16 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software One thing. To amortize the loan correctly, at some point the Accrued Rate must be 0% and the Paid Rate must be equal to or higher than the previously entered Accrued Rate. Paid Rate The paid rate is the rate that payments are actually based upon during the early years of a negative amortizing loan. This rate is lower than the Accrued Rate. Accrued Rate The accrued rate is the rate that is actually used to deter- mine the interest that will be due on the outstanding balance. To set the accrued or paid rate, put the cursor on the Annual Rate Field and press <F10>. Follow the on screen prompts. Summary Window One of the unique features of AmortizeIt! is the Summary Window. This window will detail the total principal and interest paid through any period as well as the interest saved as the result of extra payments paid to principal. The remaining balance will be shown if there is any. To use this feature, simply press <S> when an amortization schedule is displayed on the screen. A window will appear and you will be asked for the period number that you want the loan summarized through. Enter that value and press enter. The loan will then be summarized (this may take a while, depending upon the number of periods) and a window will be displayed with the summary details. A word of CAUTION when using this feature. If you had entered a series of extra payments through the ending period, the summary window will add all of those extra payments up and include them in the total of extra payments paid even though the loan is paid off. (After all, you did tell the program that you were making those extra payments, didn't you!). The way to avoid this problem is simple. Enter (or use the copy feature) all of the extra payments that you might make through the last period, then run the amortization schedule on the screen and note at what period the loan is paid off as the result of the extra payments. Then go back to the extra payment screen and cancel or zero out all of the extra payments from the new last payment period on. Now, when you look at the summary screen, the extra payment total will be accurate. 17 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software REMAINING BALANCE This routine, as it says, will calculate the remaining bal- ance of a loan. The result is calculated after the payment is made. So if you want to pay off a loan when you are making the 100th payment, you will want to know the balance due after the 99th payment is made. Balance After Payment Enter the payment period number that you want the remaining balance calculated up to. That is, this routine assumes that the payment was made for this period, and that you want to know what the balance is after this payment is made. Example: Assume that you have a mortgage for $176,500, with 360 monthly payments at a rate of 9.25% compounded monthly. Payment is set to arrears. To find the remaining balance of the loan after 5 years, enter 60 in the Balance After Payment # field. The result is $169,553.27. 18 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software BALLOON PAYMENT This routine works differently from earlier versions of the program. You now tell the program how much of a balloon you want to pay or collect (Balloon Payment field) after which payment number (Payment # Balloon Due), and AmortizeIt! will calculate what the regular payment would be in order to have the balloon amount that you desire. The balloon is actually the remaining balance of the loan at a particular point. This routine will allow you to structure a loan so that an amount due is paid off in a relatively short period of time, but at a payment amount that would be less than required to amortize the entire loan in a short time span. By setting the balloon amount, you can control the rate at which the principal is paid down. Often, this will be faster than if the loan were amortized over the longer period of time. Balloon Payment The remaining balance of the loan at the point that you want to collect that balance. Payment # Balloon Due The payment number you want to collect the balloon on. The value must be less than the total number of payments. Example: Assume that you want to borrow $250,000 for a house but you cannot find a lender willing to lend you this amount for a term that is long enough to give you an affordable payment. If you structure a loan with a balloon of $225,000 after 5 years, you may be able to swing a deal. Assuming an interest rate of 9.75%, your monthly payment would be $2,356.23 or a great deal less than the payment for a five year loan. (This assumes monthly payments and compounding with payments made in arrears.) To print an amortization schedule with a balloon see "setting the payment amount" under Loan Table. 19 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software ACCELERATED PAYMENT This is a very fast and easy routine to use to show how much interest you will save if you make extra REGULAR payments. You will be able to set the extra amount you want to have applied toward the principal starting after whatever payment number you wish. If you want to make IRREGULAR payments or you want to vary the amount of each payment, use the Amortization Routine to key in the extra payments. Then use the summary feature to show the interest saved. Increase After Payment Enter the payment number after which the extra payment is to be applied. If you have a 48 month loan, and you want to start sending an extra $100 after the first year, then enter 12 since you will send the first extra amount with the 13th payment. Extra $ Paid How much extra money are you going to send along with each payment. Enter the dollar amount. Periods to Pay Off This result tells you how many TOTAL periods it will actually take to pay the loan off as the result of the extra payments. Don't become confused. This is NOT the number of periods of extra payments. Example: In the early years of a normal mortgage, most of the payment amount goes toward paying interest. (If you don't believe this, just look at the Loan Table routine.) You can save yourself a lot of this interest expense by paying a small extra amount to be applied toward principal early in the loan. Take a 30 year $250,000 mortgage at 10.5%. If, after the fifth year (Increase AFTER Period 60) you want to send an extra $150 with each pay- ment, you will pay the loan off in less than 25 years and you will save $116,055.89 in interest. This $150 is only about a 7% increase in the monthly payment. (This example is assuming payment in arrears, along with monthly payments and monthly compounding.) The effects of accelerated payments will be greater the higher the interest rate, the sooner they are begun and the longer the term. 20 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software SUGGESTION: If you are making extra payments to principal on a loan, we suggest that you do so by making the payment with a separate check, and plainly writing on the check that it is a principal payment. After you mail the payment, follow it up with a phone call to the lender to make sure that the payment was applied toward principal. Even though we have clearly stated in letters that were included with these checks that we were making a payment to be applied toward principal, our bank has used it to pay the next payment early in more than half the cases that we sent in the extra payments. (That is they use the extra payment to pay the next payment due, rather than to apply the entire check toward principal. Of course this does not save the borrower any money!) 21 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software INTEREST DUE It is often necessary to know how much interest is due when 1) a loan is being paid off on other than a payment due date or 2) to check the interest being paid on an investment. The Inter- est Due routine will calculate the interest that is due between any two dates or for any number of days. Enter the first date (usually the day the last payment was made) and then enter either the date that the loan is being paid off or skip to the next field and enter the number of days for calculating the interest. Start/Last Date Enter the Start and Last Dates for the period that the money is outstanding. NOTE: It is not necessary to enter a Start or Last date. If you enter a Start Date and enter a positive number for the Number of Days, then the Last Date is automatically calculated. If you enter the Last Date and enter a negative number for the Number of Days, then the Start Date is automatically calculated. Using the above procedure, it is possible to determine the date X days from a specific date. Number of Days The number of days for which interest is due. NOTE: It is not necessary to enter a value for the Number of Days. If you enter both a Start Date and a Last Date, then the number of days is automatically calculated for you. This, of course, is the classic days between dates routine. The range of acceptable values here is from -9,999 to 32,000. If you enter a negative number of days, AmortizeIt! will calculate the Start Date. If you enter a positive number, the Last Date will be calculated. Compounding Period This routine supports 10 compounding periods. Besides the normal daily, weekly, biweekly etc., this routine supports simple interest and continuous compounding as well. "None" is to be selected when you want to calculate simple interest. That is, there is no compounding. "Continuous" compounding assumes that funds are earning interest constantly. This is a higher frequency of compounding 22 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software than daily and of course will result in the largest return on a deposit. (Or the highest interest bill if you are paying inter- est!) Further Note: The last two fields on the Interest Due screen tells you the day of the week for the Start and Last Date. Enter the amount that is outstanding on the loan and the interest rate. Select the compounding period and days per year. Press <F9> to calculate the results. Example: If you need to find the interest due for 45 days and you are assuming monthly compounding enter the Start Date, skip the Last Date, and enter 45 for the Number of Days. Enter $20,000 for the Amount. Enter an interest rate, say 7.675% and set the compounding period to monthly and the days per year to 360. The result will be $20,187.99 While this routine is designed to find the interest due and future value of a single amount, it is possible to calculate both for a series of payments. The method is simple but tedious. Calculate the results for each payment and then sum the results. (You should use the future value routine under the finance menu to calculate the FV of a series. The only reason you would use the Interest Due Routine is to achieve a higher degree of accuracy needed because of fractional periods.) This routine uses a technique that converts the nominal rate at the compounding frequency that you select to an equal nominal rate for daily compounding. Interest is then calculated for the exact number of days. This MAY result in a SLIGHTLY different amount of interest due if the rate had not been converted but rather interest was figured using a fractional period technique at the compounding frequency selected. NOTE: The calendar math routine from version 3.0/3.1 has been incorporated into this routine. 23 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software THE QUESTIONS Annual Rate This is the nominal or stated annual interest rate either charged or earned. The range of values is 1 to 49 percent. Do NOT enter a percent (%) sign. Pressing <F10> in SOME routines will bring up an interest rate menu that will allow you to make changes to the rate. Rate changes can be made either annually or periodically. Compounding Period AmortizeIt! supports 8 different compounding periods. (Daily, Weekly, BiWeekly, Monthly, Bimonthly, Quarterly, Semiannually, Annually) To change from one payment period to another, tap either the space bar <SP> or the dark gray plus <+> or minus <-> keys on the right side of the keyboard. NOTE: You CANNOT select a compounding period that is of a longer duration than the payment period. If you want to calculate a loan with semiannual compounding, first make sure that either an annual or a semiannual payment period is set. Days Per Year Payments and amortization may be calculated using either a 360 or a 365 day year. The 360 day year is the most commonly used value, and this is the default for AmortizeIt!. Loan Amount Total amount that is being financed. You may enter a value up to $99,999,999. (Do not enter a $ sign.) Loan Table or Amortization Routine: You will NOT be allowed to make a 0 entry. While in this field, press <F10> to add extra, short, or skipped payments. Calculator Routine: Will solve for the amount if a 0 is entered. 24 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software Payments Number of total payments that one expects to make. There are several things to consider. First this is not the number of payments per year. Secondly, the maximum total number of payments is 480 but the term can not exceed 40 years (see note below). Loan Table or Amortization Routine: Note that you cannot amortize a loan that exceeds 40 years. So if you are amortizing a loan with semiannual payments, then the maximum total number of payments is 80 (2 payments per year X 40 years = 80 payments). If one is amortizing a mortgage with an extra payment(s) the number of periods entered is the total number of periods as if there were NO extra payments made. AmortizeIt! will automatically calculate the effects of early payments. Also, if you want to do a 15 year accelerated biweekly mortgage, you would enter 360 payments. One (1) is the minimum value that can be entered while in the amortization routine Calculator Routine: If zero (0) is entered then AmortizeIt! will solve for the number of payments. While you can not enter a fractional number of payments (that is, you can only enter full payments such as 48 and not 48.5), AmortizeIt!, while solving for the total number of payments, will display the fractional part of a payment in the interest of accuracy. You will have to decide if the amount of the loan, the payment or the rate is to be adjusted to eliminate the fractional period. Payment Amount Enter payment amount. Acceptable range: $1.00 to $99,999,999- .00. Do NOT enter a $ sign. Initially, it is assumed that the same amount is to be paid for each payment period. If you want the payment amounts to change, press <F10> while entering data in this field. A menu will appear that will allow you to enter different payment amounts. The amount may be adjust- ed annually or periodically (when any payment is made). Selecting "fixed" from the menu, will reset all payments equal to the first payment. Payment Date Date of first payment. Note, for a loan that is calculated using the Payment in Arrears Method, it is assumed that the origination date of the loan is exactly one period before the first payment date. 25 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software Payment Method Payments (or deposits) may be made either in advance of or after a periodic interest calculation. (Or at the beginning or end of the period.) Deposits in advance are credited before calculation and thus earn interest more than one made in arrears. Payment Period This is the frequency at which payments are made. That is payments may be made daily, weekly, biweekly, monthly, bimonthly, quarterly, semiannually, or annually. This is equivalent to 365, 52, 26, 12, 6, 4, 2 or 1 periods per year. To change from one payment period to another, tap either the space bar <SP> or the dark gray plus <+> or minus <-> keys on the right side of the keyboard. In most cases, you CANNOT select a payment period that is a shorter duration than the compounding period. Periodic Payment This is the amount that would be paid on each payment date to amortize the loan. Loan Calculator: Enter zero (0) and press <F9> to solve for payment amount. Present Value The present value is what an amount is worth in current dollars. It is always less than the future value except in maybe cases of extreme deflation. Acceptable range: $1 - $99,999,999. Starting Date This is the starting date for the routine. All ending dates are based on this date. To enter a date, you do not need to enter leading zeros. That is to enter June 8 1990, you may enter 6/8/90 or 06/09/1990. There is no need to type the "/". Also, if you just need to edit the day, for example, you can use the <tab> key to tab to the day field. 26 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software Total Periods Number of total periods one expects. There are several things to consider. First this is NOT the number of periods per year. The lowest value that can be entered here is 1 and the maximum total number of periods is 480. HOWEVER, the maximum number of years that the program will accept is 40. Therefore, you cannot enter 180 here if the payment period is set to quarterly. 180 divided by 4 is 45 years, which is over the maximum. Please see the appendix for a chart that shows the acceptable number of payment periods. 27 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software FILES Pressing <F2> from almost anywhere in the program will display the Save/Retrieve Menu. The only time <F2> will not be an option is while another menu or message window is displayed. You next will have to choose what data it is that you want to save or retrieve. (see below, under File Structure) After selecting the data, you will be prompted for a file name. You may either enter a file name, or you may enter a DOS wild card character (Examples: *.*, S*.*, S???.???, A:*.*). If you enter part of a file name or a name containing a wild card, you will be presented with a list of the files on the drive. Use the cursor keys, to move the highlight selector to a file name. If you are saving data, you will be prompted to confirm that you want to overwrite the existing file. If you are saving only some data, (i.e. adjustable rates), you will only replace the adjust- able rate part of the file. AmortizeIt! automatically checks to see that you are updating an AmortizeIt! file. It will not allow you to alter a file that is not one of its own. You will also not be allow to retrieve a file that is not an AmortizeIt! file. The file structure was changed between AmortizeIt! 3.1 and AmortizeIt! 4.0. The two structures are NOT compatible and therefore a file from version 3.1 and earlier cannot be used with versions from 4.0 on. One final note, the file structure for all of our financial programs is the same. So if you have AmortizeIt! and you want to upgrade to AmortizeIt!, you will still be able to use your data files from AmortizeIt!. FILE STRUCTURE All of the data that can be saved, is saved to one file. That is, the budget, net worth, amortization data for one client can be kept in one file. We feel that this is easier for the user than keeping track of say 4 or 5 different files for one client. On the other hand, you have to give it some thought as to what data you are working with when you do a save or retrieve. For example: If you are doing amortization projections for a client, and you want to save the data to an existing file, you must be careful to select just the Loan/Amortization data. This is done in order not to overwrite the information in the file that might be there for the budget, net worth or IRR/Net Present 28 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software Value routines. Likewise, when you retrieve data, you must pick the data that you want to retrieve. That is to say, if you are currently working on a budget for Mr. & Mrs. Rivadeneyra and Mr. Langenhahn calls with a question about a prospective mortgage for a summer house, you must make sure that you only retrieve the Loan/Amortization data in order that you do not overwrite (destroy!) the information that you have keyed into the budget routine for Mr. and Mrs. Rivadeneyra. The program's data file is structured so that the following elements of data can be saved, updated or retrieved individually: Adjustable Rates, eXtra Payments, Budget Data, Net Worth Data, Cash Flows, Inflation Rates, Rates & eXtra Payments, Loan/Amortization, Rental Analysis, Everything. In addition to these elements, the current value of Present Value, Future Value, Payment Method, Payment Period, Compounding Period and Starting Date are also saved. To give you a few examples, if you want to save the deposit amounts in the future value routine, you would save the eXtra Payments. (Extra Payments and Deposits are the same thing to the program. This is so that you can easily see what the future value or present value of the extra monies is that you applied toward the principal of a mortgage. That is, if you key in extra loan payments, you do not need to rekey in the values as a deposit in the future value routine.) If you want to save the cash flow values from the Net Present Value or the IRR routines, you would save the Cash Flows. If you want to save the inflation rates for the Purchasing Power Rou- tine, you would save the Inflation Rates. And if you have a ARM (adjustable rate mortgage) and you make extra payments to reduce the outstanding principal, you would save Rates & eXtra Payments or the Loan/Amortization data. 29 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software Some Relationships Between the Routines (Only SOME of this is applicable to AmortizeIt!) As we have stated, the help screens can actually provide you with all of the information that you need to operate AmortizeIt!. The purpose of this section is to show with examples how you can solve financial problems with the program where the choice of routine may not be obvious. Let us look at how two professional people might use the program to solve problems for their clients. Mr. I. M. Smart is a financial planner. He often, as might be expected, needs to do financial presentations and he finds AmortizeIt! very useful for generating figures to back up his opinions. Ms. Penney Rich is an attorney whose cliental includes a number of sports stars and entertainment personalities. She is often involved with negotiating settlements that require her to use the financial, budget and net worth routines. Let us start with an example for one of Mr. Smart's clients. Reds Mason is a builder who also likes to speculate in the real estate market. He owns several properties which he rents out to commercial tenants. He wants to know the best way to manage his money. He particularly wants to know the effect of prepaying his mortgages. (Three routines will be used to arrive at an answer.) First, Mr. Smart goes to the Remaining Balance routine to see how much is still owed on one of the loans. He enters the origi- nal loan amount of $250,000, 180 for the number of monthly periods and 11% for the rate. Since the loan has been held for exactly 2 years, he enters 24 to find out the remaining balance after the 24th payment. The result is that there is sill $235,315 owed on the loan. After this calculation, Mr. Smart goes to the Loan Table Routine and notes that the details of the mortgage are already entered as the result of having entered them in the remaining balance routine. The only thing he needs to do is to change the amount of loan to equal the remaining balance ($235,315) and to change the term from 180 to 156, since there are only 156 remain- ing periods. At this point, while he is on the amount of loan field he presses <F10> to enter the extra payments that Mr. Mason wants to make. Mr. Mason feels that he can pay an extra $2,000, once a year. AmortizeIt!'s copy feature is used to enter the extra pay- ments. Once that is done, the amortization table is displayed and it shows that the loan is paid off after 138 payments instead of 30 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software the 156 payments it would have taken if the extra payments were not made. To summarize the details of the savings, press <F10> and summarize the loan through the 138th period (156 is NOT entered here since there are no longer 156 periods.) Mr. Smart can now show Mr. Mason that his extra $2,000 a year, if paid for a total of 12 years, will save him $25,222 in interest payments. Now that sounds pretty good to Mr. Mason. But in fact, Mr. Smart has to point out that this is not the real savings to him. He suggests that Mr. Mason could do something else with the $2,000 rather than apply it toward his mortgage. What happens if he decides to invest the money in tax free bonds? How much would $2,000 a year grow to after twelve years? Again, Mr. Smart turns to use AmortizeIt!. He taps <Esc> a few times to get back to the main menu. He picks the future value routine from the finance menu. Once in the routine he changes the present value to $0 and the interest rate to 8.5% which is the going rate for the bonds. Since the $2,000 payments were entered in the Loan Table, there is no need to re-enter them in the Future Value routine. Therefore, all that is left to do is to press <F9> and the Future Value Routine calculates that the $2,000 deposited every year for 12 years will grow to $41,329.70 over the 138 periods. It also shows that there is a gain of $17,329 over the $24,000 that was invested. Now the idea of making extra payments does not look as good as it did at first. Mr. Smart is able to demonstrate to his client that the actual cash savings is only $7,893 (The $25,222 interest savings less the $17,329 gain.) when the future value of the series of $2,000 payments is taken into consideration. And in fact, the savings is even less when you consider that the inter- est on the mortgage is probably tax deductible. If Mr. Mason is in a 28% tax bracket and if he pays the $25,222 interest he will realize an additional tax savings of $7,062. So therefore, as incredible as it may seem, Mr. Mason would actually LOOSE $267. if he makes the extra payments! Now that Mr. Mason knows that he does not want to make the extra payments. He changes the subject to ask about his rental properties. He knows (or at least he thinks that he knows) that he his making money. The question is, is he making a reasonable return on his investment. (Two routines will be used to arrive at an answer.) To answer this question, Mr. Smart uses AmortizeIt!'s Rental Income Analysis Routine. We wouldn't bother you with lots of 31 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software details here since there are thirty variables involved in analyz- ing rental income. But so you can follow along using the program, let us assume that he bought a building for $300,000 and he has a mortgage of $250,000 for 180 months at 11%. There are 2 points charged on the loan. Also assume that the building will appreci- ate at 9% per year. We will not allow for any inflation of expenses, income, or property taxes. In fact, we will not even have a property tax figure! (Don't we wish!) The monthly expenses will be $3,000 and the total monthly rental income will be $6,000. The depreciation basis is $275,000, the useful life is 31.5 years, the purchase date is 10/11/1990 and the date that the property is sold is 4/11/2000. This scenario will generate a bottom line cash flow of $339,502. But remember, the question is, "Is this a good investment?". Mr. Smart hits the <Esc> key a few times and goes to the finance routines. Under Evaluation he chooses the IRR routine. The internal rate of return is used to determine the rate of return on a series of complicated cash flows. In this case the cash flows are already entered, since they are carried over from the calculations of the Rental Income Analysis routine. All that is left to do is to press <F9>. The result is that the annual rate of return is less than 1%. No comments needed. Changes must be made! Moving on to Ms. Rich, we find her in the middle of nego- tiating a contract for a local sports star. The client, Sam Fielder, wants to sign for $1,000,000 bonus, payable at the start of the new contract. The owners of the franchise, who are anxious to keep the local hero on their payroll, fear that they will severely jeopardize the financial health of their organization if they meet his demands. They counter propose that they will pay him, $200,000, a year for ten years starting after five years. Of course, the challenge here is to see if the offer is as good as the current demand. Ms. Rich uses the Present Value of a Series Routine to see if it is. Before entering the Payment Amounts, she sets the Total Periods to 15, the Payment Period and Compounding Period to annual. She assumes a nominal rate of 6.5%. Once these are entered she returns to the Payment Amount field. Instead of filling in an amount, she press <F10> to enter individual cash flows. She selects "extra periodically". (Since payments are annual, extra annually and extra periodically give the same result here.) She then uses the copy feature to copy $200,000 as the amount from period 6 through period 15. (Remember, the proposal on the table is for $200,000 a year starting in the sixth year.) Once this is done she escapes out. She presses <F9> to solve 32 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software for the result. Ms. Rich sees that the series of future payments is worth $1,046,864.50. She can therefore advise her client that the two compensation packages are essentially the same. And in fact, she points out that if Mr. Fielder does not need the cash now, then he may be better off postponing the income to a time when his cash flow may be less. Next, Mr. Fielder wants to provide some income for his Mother who has nearly reached retirement age. Initially, he thought that he would buy her an annuity to generate income. His goal is to provide her with $5,000 a month for the next fifteen years. He has $400,000 readily available for this investment. As would be expected, Ms. Rich uses the Time to Withdrawal Routine to check the feasibility of this plan. She discovers that $400,000 invested earning 8.5% annually will pay the desired $5,000 a month for only 119 periods, or for a little less than ten years. Now the question is, if Mr. Fields wants to provide the $5,000 a month, and he wants to do so for fifteen years, how much would he have to invest? To arrive at the answer is simple, but not so obvious. Ms. Rich exits from the Time to Withdrawal routine and from the main menu she selects the Loan Analysis Calculator Routine. There she keys in 0 for the Amount of Loan and she enters 180 for the term. (Monthly payments for fifteen years is 180 payments.). She assumes the same rate of return or 8.5% and she sets the payment to $5,000. When she solves for the result they learn that it will take an initial investment of $507,748.47 to generate the kind of income that Mr. Fields is seeking. (You can go back to the Time to Withdrawal Routine to confirm this calculation.) There we have it. These are some real life examples of how users use AmortizeIt!. We hope that these illustrations expand your understanding of how the program can be used. Again, these are only some to the applications for these routines. We strongly encourage you to "play" with the program. Experiment and try to answer other "what if" questions. Let us know what you find out. 33 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software APPENDIX ALLOWABLE TOTAL PERIODS FOR EACH PAYMENT/COMPOUNDING PERIOD YEARS WKLY BIWKLY MONTH BIMNTH QRTRLY SEMIANNL 1 52 26 12 6 4 2 2 104 52 24 12 8 4 3 156 78 36 18 12 6 4 208 104 48 24 16 8 5 260 130 60 30 20 10 6 312 156 72 36 24 12 7 364 182 84 42 28 14 8 416 208 96 48 32 16 9 468 234 108 54 36 18 10 260 120 60 40 20 11 286 132 66 44 22 12 312 144 72 48 24 13 338 156 78 52 26 14 364 168 84 56 28 15 390 180 90 60 30 16 416 192 96 64 32 17 442 204 102 68 34 18 468 216 108 72 36 19 228 114 76 38 20 240 120 80 40 21 252 126 84 42 22 264 132 88 44 23 276 138 92 46 24 288 144 96 48 25 300 150 100 50 26 312 156 104 52 27 324 162 108 54 28 336 168 112 56 29 348 174 116 58 30 360 180 120 60 31 372 186 124 62 32 384 192 128 64 33 396 198 132 66 34 408 204 136 68 35 420 210 140 70 36 432 216 144 72 37 444 222 148 74 38 456 228 152 76 39 468 234 156 78 40 480 240 160 80 34 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software MESSAGES "CALC" When the "CALC" message is displayed in the upper right hand corner of the window, this means that the results that are currently shown are not accurate. To get rid of this message and to display the correct calculations, press the <F9> key. "Out-of-Range" Occasionally, you will see an "Out-of-Range" message dis- played in the upper left corner of the window. When you see this message, it means that the resulting answer to a calculation produced a result that was too large to display. Therefore, DO NOT accept the displayed answer as being correct!! 35 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software PRINTING TO DISK When you print to disk, the report or schedule is saved in a standard ASCII file on the designated drive. The purpose of being able to print to disk is so that you can later load the file into your favorite word processor for editing. This will allow you, for example, to bold face selected numbers in a report. Of course you can also change the numbers that AmortizeIt! gives you, if you desire! 36 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software LOCAL MENUS DESTINATION MENU This menu is displayed when you are starting a schedule or preparing to send an amortization schedule to the printer. There are three destinations to pick from: Screen : Printer : Disk File Pick the screen option to display the schedule to the screen. Pick the printer option to print the schedule. The next window that you see will ask a series of questions that will be used to customize the title page of the printed schedule. The Disk File option will send the schedule to a disk file. By "printing to disk" as it is sometimes called, you will be able to take the resulting ASCII text file and load it into a word processor so that you can highlight important points. You will also be able to add notes or modify the title page. INTEREST RATE MENU When applicable, the interest rate menu may be accessed by pressing <F10> when the cursor is in the interest rate field on a routine's main screen. Fixed Rate This option will allow you to reset all of the rates for each payment or deposit period equal to the value entered on the routine's main screen. This is the quick and easy method to change an adjustable rate loan to a fixed rate loan. Adjust Annually This option will allow you to set an interest rate for an entire year. The rate changes one payment period prior to the anniversary date of the loan if the payment is in arrears. It changes on the anniversary date of the loan if the payment is in advanced. Adjust Periodically This option will allow you to change the interest rate on any payment or deposit date. 37 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software FISCAL MONTH MENU To access this menu, you must be on the Display Year field in the Loan Table routine. Press <F10> for this menu. Select the first month of the fiscal year from the list by typing the capital letter in the months name or, alternatively, by using the cursor keys to move the high light bar over the month's name and pressing <Enter>. EXTRA PAYMENT MENU When applicable, the payments or deposited amount may be altered. To do this, access the extra payment menu by pressing <F10> when the cursor is in the Deposit, Payment or Amount of Loan field on a routine's main screen. Watch the help lines at the bottom of the screen to know when this is an option. No Extra Payment Selecting this option will cancel all previously entered extra payments or deposits. Extra Annually This will allow you to enter an extra payment or deposit once a year on the anniversary date of the loan. Note however, if you use the copy function to copy an annual payment or deposit across several years that if you pick a starting period other than on the anniversary date, the amount will be copied every twelve months from the period you select. This will happen even though the period are not displayed on the screen. For example: If your mortgage's origination date is in November but you expect to receive tax refunds in about April that you would use to pay principal on the loan. You can copy the extra amount from the 18th period on if you want to start making the payments in April in the second year of the mortgage. Extra Periodically This will allow you to enter extra payment(s) on any payment date. This is the option that you want to select if you wish to schedule a series of regular extra payments. (Follow the menus from the entry screen that allows extra payments to be copied.) 38 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software COPY RATE Press <F10> for the local menu to copy a rate over many periods when interest rates are being added. This is a very fast way to set one rate over a block of many periods. Once the copy window is displayed, you will be asked for an interest rate, a starting period and an ending period. If you are adjusting rates by the period, then you will be able to copy the rate from any period to any period. If you are adjusting the rate annually, the program will copy the rate starting at any period and use that rate for a minimum of at least a years worth of payments. This is to say, that if you are adjusting the rate annually, and the loan is being paid quarterly, then the interest rate that you enter in the copy mode is used for determining the payment amount for at least 3 payment periods following the initial period. When you are in the copy window, you may press <Esc> so that the copy does not take place and the rates are left unchanged, or you press <F9> to perform the copy. 39 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software COPY AMOUNT Press <F10> for the local menu to copy an extra payment over many periods when payments are being added. This is a very fast way to set or schedule one regular extra payment over a block of many periods. Once the copy window is displayed, you will be asked for a dollar amount, a starting period and an ending period. If you are adding extra payments by the period, then you will be able to copy the amount from any period to any period. If you are adding payments annually, the program will copy the amount from the starting period and copy it to the period that is on the anniversary date of the starting period. For example, if the payment period is quarterly, and you are adding extra payments annually, then if you use the copy feature to copy an extra payment from period 10 to period 20, then the extra payments will be made when the regular payments are made for periods 10, 14, and 18. Please note that when you are copying extra payments that are being made once a year, that you are not restricted to making those extra payments on an anniversary. When you are in the copy window, you may press <Esc> so that the copy does not take place and the rates are left unchanged, or you press <F9> to perform the copy. 40 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software SETTING OTHER OPTIONS, THE INSTALL MENU The install (or setup) function will allow you to customize certain features of the program. To start install, you must first be in the directory that AmortizeIt! is located in. If you set the program up on your hard disk the way we suggested at the start of this manual, you would log on to the drive that AmortizeIt! is located on and type "CD SLVIT4" Then from there enter: Amortize /I You will then be shown a menu from which you can set the follow- ing items: Color Picker Selecting the color picker will give you another menu of choices so that you can completely customize AmortizeIt!'s screen colors. You will be able to change: Frame (menu frame or window border) Title (menu/window title background) Unselected Text (normal menu and screen text) Selected (text in menu's cursor) Pick (character that is menu choice) Help (help lines at bottom of a window) Before you start to change the default colors, please make sure that you are working with a backup copy!! You may pick a color for AmortizeIt!'s text by picking the unselected text option. By selecting this or any color option, you will be shown a box with text written in it. If you press the space bar the colors will change. Note how first all possible text colors are displayed for a particular background color. Once all text colors are shown for the background color, the back- ground color will change and you will be rotated through all of the text color combinations again for the new background color. You can move "BACKWARD" or "FORWARD" through the color choices by using the <+> or <-> keys on the right side of the keyboard near the numeric keypad. 41 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software Once you see a color combination that you like, press <Enter> to accept it. If you wish, you may press <Esc> to cancel the color picking option and to return to the install menu without setting a color. You may set the colors for any of the options using the same technique. When you are finished setting the colors, hit <Esc> from the "color picker" menu to return to the main install menu. (Remember, If you hit <Esc> while the color pick window is shown you will not be setting the new color, <Esc> is to exit the color pick menu only.) Default Subdirectory The default subdirectory is the directory that AmortizeIt! looks into to find its overlay and data files. There is no need for you to install a default subdirectory if the program is started while you are in the subdirectory that AmortizeIt! is in on your hard drive. If you do set a default subdirectory, when you want to save or retrieve your data files (files with interest rates, budget info, etc.) you will be prompted with the default directory. This, of course, will keep your data files from being scattered all over your hard disk. (You can override this setting when you are doing a save or retrieve.) Budget Items You can change the titles (descriptions) of all of the items listed in the budget. This way, the budget routine is not limited to being a personal budget program. Rather, if you run a small business, you can change the category name for example from Mortgage Payment to Rent. The item descriptions that are preceded by a "T" are the descriptions of "TOTAL" items. That is the descriptions that are entered into these field should say some- thing such as "Advertising Total". These total descriptions are referencing the items immediately preceding the "T". The total descriptions appear in the reports. You are limited to 21 characters plus a ":" including all punctuation and spaces for all descriptions. Net Worth Items You can change the titles of all of the items listed in the Net Worth Statement. This way, the Net Worth Routine is not limited to personal use. Rather, if you run a small business, you can change the title for any category. (Don't forget to work with 42 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software a copy of the program before you start to modify it!!) You are limited to 21 characters plus a ":" including all punctuation and spaces for all descriptions. Page Length Page length in this case is actually a misnomer. Entering a value here will actually set AmortizeIt! for the number of lines that you want to print on a page. For standard 8.5 x 11 inch paper we suggest a setting of 60 line to allow for an appropriate bottom margin. You can set any value from 5 lines to 255 lines. Save Changes & Quit This option will save the changes that were made while using the install routine. Thus, when you start AmortizeIt!, these changes will become the program's default settings. Quit Install/No Save This option will ignore all changes that were just made while in the install routine. 43 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software PINE GROVE SOFTWARE Pine Grove Software was founded in 1984. MoneyCalc!, RentIt!, AmortizeIt!, Budget Plus! and AmortizeIt!, The Financial Calculator, are our five software packages. We offer custom programming services as well as modification of our programs for your use. Pine Grove Software 67-38 108th St., Suite D-1 Forest Hills, NY 11375 (800) 242-9192 or (718) 575-9192 44 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software OTHER PROGRAMS SolveIt! is our flagship product. Our other programs at this time are subsets of this program. They offer an even more econom- ical way to buy just the routines that you need. MoneyCalc! Includes FV, PV, IRR, NPV, ANNUITY calculator. Budget Plus! Includes Budget & Net Worth routines. RentIt! Includes RENTAL ANALYSIS, AFFORDABLE HOUSE, 2 MORT As of January 1991, each of the above programs sells for $50 plus $5 for shipping except for SolveIt! which sells for $90 plus $5 shipping. When you register a program with us you will automatically receive the currently shipping version plus you will receive the next upgrade at no charge. 45 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software SUBSCRIPTION Pine Grove Software has a subscription service for SolveIt!. For $20 plus $4 shipping/handling per year you will automatically receive at least two upgrades to SolveIt!. This subscription is included at no charge for the first year after you register the program. 46 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software REFERENCES Haim Levy & Marshall Sarnat, Capital Investment & Financial Decisions, Prentice/Hall International, 1978 Hewlett-Packard Business Calculator Owner's Manual, HP-10B, Edition 2, June 1989 Shillinglaw, Gordon, and Ronen, Accounting, A Management Approach Trost, Stanley R., Useful Basic Programs for the IBM PC, SYBEX 1983 47 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software COMING FEATURES We plan to add the following features to AmortizeIt! Lease vs Buy comparisons Short and long beginning periods Exact day interest rate calculation Interest change on any date, not just payment dates Matrix display that displays different rates and different loan amounts and calculates the resulting payments APR factoring in points and extra payments Ability to compare 2 or 3 loans at the same time POP-UP Math Screen : Add, Subtract, Multiply, Divide and Percentages : move the results into an AmortizeIt! field 48 AmortizeIt! 1.1d/1.11 (c) Pine Grove Software INDEX "CALC" . . . . . . . . . 35 Fiscal year . . . . 12 "DO-IT!" . . . . . . . . 7 Fixed Rate . . . . 37 "Out-of-Range" . . . . . 35 Increase After Payment20 <Ctrl> . . . . . . . . . 6 Interest Due . . . 22 <Esc> . . . . . . . . . . 6 Interest Only . . . 13 <F1> . . . . . . . . . . 6 INTEREST RATE MENU 37 <F10> . . . . . . . . . . 7 Loan Amount . . . . 24 <F2> . . . . . . . . 6, 28 Loan Calculator . . 11 <F3> . . . . . . . . . . 6 Loan Table Display 16 <F4> . . . . . . . . . . 6 Negative Amortization 16 <F5> . . . . . . . . . . 7 Net Worth Items . . 42 <F9> . . . . . . . . . . 7 No Extra Payment . 38 Accelerated Payment . . . 20 None . . . . . . . 22 Accrued Rate . . . . . . 17 Number of Days . . 22 Adjust Annually . . . . . 37 Other Options . . . 41 Adjust Periodically . . . 37 Page Length . . . . 43 AMORTIZATION ROUTINE . . 12 Paid Rate . . . . . 17 Amortize . . . . . . . . 4 Payment # Balloon Due 19 Amortize /G . . . . . . . 4 Payment amount 19, 25 Amortize /I . . . . . 4, 41 Payment Date . . . 25 Amortizing Method . . . . 13 Payment Method 12, 25 Amount Returned . . . . . 24 Payment Period . . 26 Annual Rate . . . . . 14, 24 Payments . . . . . 24 Balance After Payment . . 18 Periodic Payment . 26 Balloon payment . . . 15, 19 Periods to Pay Off 20 Budget Items . . . . . . 42 Pine Grove Software 44 Cash Flows . . . . . . . 24 Present Value . . . 26 Color Picker . . . . . . 41 Printing to Disk . 36 Compounding Period . . . 22 Questions . 11, 12, 24 Continuous . . . . . . . 22 References . . . . 47 Copy Amount . . . . . . . 40 Relationships . . . 30 Copy Rate . . . . . . . . 39 Remaining Balance . 18 Days Per Year . . . . 13, 24 Rules-of-78 . . . . 13 Default Subdirectory . . 42 Save Changes & Quit 43 DESTINATION MENU . . . . 37 Selecting From Menus 5 Discount Rate . . . . . . 24 Start/Last Date . . 22 Display Year . . . . . . 12 Starting Date . . . 26 Extra $ Paid . . . . . . 20 Subscription . . . 46 Extra Annually . . . . . 38 Summary Window . . 17 EXTRA PAYMENT MENU . . . 38 The Questions 11, 12, 24 Extra Payments . . . . . 14 Total Periods . . . 27 Extra Periodically . . . 38 US Rule . . . . . . 13 File Structure . . . . . 28 Files . . . . . . . . . . 28 Fiscal . . . . . . . . . 38 Fiscal Month . . . . . . 14 Fiscal Month Menu . . . . 38 49 SHAREWARE, WHAT IS IT? For those who are not familiar with shareware, it is a term coined by Bob Wallace of PC Write fame. Shareware is nothing more than a method used to distribute computer software. When software is distributed using this method, you, the user, are given the opportunity to use the program BEFORE YOU PAY the license fee. Shareware authors trust their prospective customers to pay the license fee/registration fee if they find the program useful. Pine Grove Software uses shareware as our method of distribution because it is good for us (we don't need to raise the huge amount of monies needed to market a program). And, at the same time, it is good for the user. The user doen't 1) pay for software that they are not going to use (Shelfware!); 2) the money they pay for software is not supporting a company's large marketing expense; and 3) the monies are put back into the company for further development of the software. We believe in shareware. It is working for Pine Grove Software and our customers. We have been using shareware as our method of distribution since 1986 The key to our ability to bring you updates to our programs as well as new software is for you to do your part. If you find our software useful, please pay the small registration fee that we ask for. Your registration fee will entitle you to receiving the currently shipping version of the program that you register, along with that, you will recieve a printed manual and a coupon good to receive one additional upgrade to our program at no charge. On top of that, we provide toll free technical support as well. We think that you will agree that this represents a very good value. Thank you in advance for your support! YOUR TAXES AND OUR PROGRAMS Don't forget, if you use one of our programs to produce or maintain income, then the registration fee that you pay should be TAX DEDUCTIBLE. Check with your tax advisor! Pine Grove Software 67-38 108th St., Suite D-1 Forest Hills, NY USA 11375 (800) 242-9192 or (718) 575-9192 50