On Mon, 30 Jul 2012 01:43:00 +0200, Bruno Campanini wrote:

Stan Brown used his keyboard to write :

Just a first look at your great work...
I'm wondering why you don't use a more precise way in calculating
effective interest rate.
If a bank offer me a loan at 6%/year and then we agree on monthly
payments, I would pay 0.486755056534305%/month, or something like that.

You have followed Excel philosophy:
interest rate/month = interest rate/year diveded by 12.
Which is mathematically and financially wrong.

It's not "Excel philosophy", but the standard way banks in the US do
it.

Ok Stan, may I correct my previous statement:
Which is mathematically wrong and financially correct in US,
mathematically wrong and financially wrong in Europe.

BTW Stan, I'm going to study your work with the related literature from
your site.
Then, if you wish, I can send you my better-conceived remarks.

Bruno

Bruno, I meant to say in my earlier reply that I suspected our
difference was a matter of different practice in the US versus other
countries.

You are looking at the larger worksheet, right, not the short one
with just formulas?

When I get time, I want to add a column for interest rate in each
payment. Then people could account both for different methods of
computing interest per period from annual interest, and also for
varying interest rates.

--
Stan Brown, Oak Road Systems, Tompkins County, New York, USA
http://OakRoadSystems.com
Shikata ga nai...