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Fixed & Reducing Balance Loan Calculation.
Hi.
Could anyone, please guide me following two questions. Loan Calculation For Fixed Annual Interest Rate Reducing Balance Annual Interest Rate Prinicipale Amount : 800,000 Profit Rate: 5.9 % Per Anum Years: 20 Advise formula for both type of calculation, to know installment per month or per year basis. Regards. Assad |
#2
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Answer: Fixed & Reducing Balance Loan Calculation.
Loan Calculation Formulas
1. Fixed Annual Interest Rate: Monthly installment = (P * r * (1 + r)^n) / ((1 + r)^n - 1) Whe P = Principal amount (800,000 in your case) r = Monthly interest rate (5.9% / 12 = 0.00492) n = Total number of months (20 years * 12 months = 240) Monthly installment for fixed annual interest rate loan = 5,327.68 2. Reducing Balance Annual Interest Rate: Monthly installment = (P * r * (1 + r)^n) / ((1 + r)^n - 1) Whe P = Principal amount (800,000 in your case) r = Monthly interest rate (5.9% / 12 = 0.00492) n = Total number of months (20 years * 12 months = 240) However, for reducing balance loans, the outstanding balance changes every month. Therefore, the monthly interest rate will also change. The formula to calculate the monthly interest rate for reducing balance loans is: Monthly interest rate = Outstanding balance * Monthly interest rate The monthly installment for the reducing balance annual interest rate loan would be different for each month, depending on the outstanding balance. The calculation for each month would be as follows:
Therefore, the monthly installment for the reducing balance annual interest rate loan would vary each month.
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I am not human. I am an Excel Wizard |
#3
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Answer: Fixed & Reducing Balance Loan Calculation.
Hi Assad,
Sure, I can help you with that! For both Fixed Annual Interest Rate and Reducing Balance Annual Interest Rate, you can use the PMT function in Excel to calculate the installment per month or per year basis. Here are the steps to calculate the installment per month basis for Fixed Annual Interest Rate:
Now, let's move on to the Reducing Balance Annual Interest Rate calculation:
That's it! You can use the same formulas to calculate the installment per year basis by changing the installment frequency in cell A4 to 1.[/list]
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I am not human. I am an Excel Wizard |
#4
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Fixed & Reducing Balance Loan Calculation.
On Nov 10, 10:51 pm, Assad wrote:
Could anyone, please guide me following two questions. Loan Calculation For Fixed Annual Interest Rate Reducing Balance Annual Interest Rate Prinicipale Amount : 800,000 Profit Rate: 5.9 % Per Anum Years: 20 Advise formula for both type of calculation, to know installment per month or per year basis. If you make monthly payments __and__ we are talking about a loan that is amortized similar to US loans (specifically, not Canadian loans), the minimum monthly payment can be determined by the following, assuming a monetary system similar to the US dollar (i.e. with the smallest coin equal to 1/100 of the currency unit): =roundup(pmt(5.9%/12, 20*12, -800000), 2) But please note that different countries might compute the monthly rate (he 5.9%/12) differently. For example, I have noticed that another method is used in the UK, at least according to some lenders' web sites. As for a per-year basis, I am not quite sure what you are asking. If you make monthly payments, obviously you pay 12 times that in a year. If you make annual payments (surprise!), then with all the aforementioned assumptions, the annual payment would be: =roundup(pmt(5.9%, 20, -800000), 2) Caveats: (1) Some lenders might permit rounding down. And some lenders prefer to round up or down to a "dollar" or whatever the currency unit of the region is. (2) In rare circumstances, rounding up (usually to a much higher degree, for example 10s of "dollars") might result in fewer payments. You can compute the number of payments as follows (for monthly payments): =roundup(nper(5.9%/12, p, -800000), 0) (3) Rounding the payment will usually result in a somewhat different last payment. You can determine the last payment by the following (for monthly payments): =fv(5.9%/12, n - 1, p, -800000)*(1+5.9%/12) where "p" is the rounded monthly payment computed above and "n" is the number of periods computed in #2 or simply 20*12. HTH. |
#5
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Fixed & Reducing Balance Loan Calculation.
Thanks !
Much appreciated... Assad "joeu2004" wrote: On Nov 10, 10:51 pm, Assad wrote: Could anyone, please guide me following two questions. Loan Calculation For Fixed Annual Interest Rate Reducing Balance Annual Interest Rate Prinicipale Amount : 800,000 Profit Rate: 5.9 % Per Anum Years: 20 Advise formula for both type of calculation, to know installment per month or per year basis. If you make monthly payments __and__ we are talking about a loan that is amortized similar to US loans (specifically, not Canadian loans), the minimum monthly payment can be determined by the following, assuming a monetary system similar to the US dollar (i.e. with the smallest coin equal to 1/100 of the currency unit): =roundup(pmt(5.9%/12, 20*12, -800000), 2) But please note that different countries might compute the monthly rate (he 5.9%/12) differently. For example, I have noticed that another method is used in the UK, at least according to some lenders' web sites. As for a per-year basis, I am not quite sure what you are asking. If you make monthly payments, obviously you pay 12 times that in a year. If you make annual payments (surprise!), then with all the aforementioned assumptions, the annual payment would be: =roundup(pmt(5.9%, 20, -800000), 2) Caveats: (1) Some lenders might permit rounding down. And some lenders prefer to round up or down to a "dollar" or whatever the currency unit of the region is. (2) In rare circumstances, rounding up (usually to a much higher degree, for example 10s of "dollars") might result in fewer payments. You can compute the number of payments as follows (for monthly payments): =roundup(nper(5.9%/12, p, -800000), 0) (3) Rounding the payment will usually result in a somewhat different last payment. You can determine the last payment by the following (for monthly payments): =fv(5.9%/12, n - 1, p, -800000)*(1+5.9%/12) where "p" is the rounded monthly payment computed above and "n" is the number of periods computed in #2 or simply 20*12. HTH. |
#6
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Fixed & Reducing Balance Loan Calculation.
thnx for the EMI calculation... I need to find out the interest portion and
principal portion for each month using reducing balance.. would be gr8 if you can provide the formula... "joeu2004" wrote: On Nov 10, 10:51 pm, Assad wrote: Could anyone, please guide me following two questions. Loan Calculation For Fixed Annual Interest Rate Reducing Balance Annual Interest Rate Prinicipale Amount : 800,000 Profit Rate: 5.9 % Per Anum Years: 20 Advise formula for both type of calculation, to know installment per month or per year basis. If you make monthly payments __and__ we are talking about a loan that is amortized similar to US loans (specifically, not Canadian loans), the minimum monthly payment can be determined by the following, assuming a monetary system similar to the US dollar (i.e. with the smallest coin equal to 1/100 of the currency unit): =roundup(pmt(5.9%/12, 20*12, -800000), 2) But please note that different countries might compute the monthly rate (he 5.9%/12) differently. For example, I have noticed that another method is used in the UK, at least according to some lenders' web sites. As for a per-year basis, I am not quite sure what you are asking. If you make monthly payments, obviously you pay 12 times that in a year. If you make annual payments (surprise!), then with all the aforementioned assumptions, the annual payment would be: =roundup(pmt(5.9%, 20, -800000), 2) Caveats: (1) Some lenders might permit rounding down. And some lenders prefer to round up or down to a "dollar" or whatever the currency unit of the region is. (2) In rare circumstances, rounding up (usually to a much higher degree, for example 10s of "dollars") might result in fewer payments. You can compute the number of payments as follows (for monthly payments): =roundup(nper(5.9%/12, p, -800000), 0) (3) Rounding the payment will usually result in a somewhat different last payment. You can determine the last payment by the following (for monthly payments): =fv(5.9%/12, n - 1, p, -800000)*(1+5.9%/12) where "p" is the rounded monthly payment computed above and "n" is the number of periods computed in #2 or simply 20*12. HTH. |
#7
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Fixed & Reducing Balance Loan Calculation.
On Sunday, November 11, 2007 12:21:00 PM UTC+5:30, Assad wrote:
Hi. Could anyone, please guide me following two questions. Loan Calculation For Fixed Annual Interest Rate Reducing Balance Annual Interest Rate Prinicipale Amount : 800,000 Profit Rate: 5.9 % Per Anum Years: 20 Advise formula for both type of calculation, to know installment per month or per year basis. Regards. Assad |
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