On Thursday, April 4, 2013 2:19:41 PM UTC-5, joeu2004 wrote:
"Michael Marshall" wrote:

joeu2004 Wrote:

For the terms above, I used Goal Seek to determine that the initial

payment is about 4348.97, and the last payment is about 6200.59.



Note: I assume that the investment growth rate of 4% is an annual

yield when compounded monthly (the payment frequency). In other

words, the monthly growth rate is (1+4%)^(1/12)-1.

[....]

Are you sure you didn't make a typo because I am getting an initial amount

of �4328.97



No typo. The difference is explained in the footnote above.



Since I assume the investment growth rate is an annual yield (compounded

rate), the monthly growth rate is (1+4%)^(1/12)-1.



Apparently, "you" (tadPMT from tadxl.com) use a monthly growth rate of

4%/12.



The latter is incorrect because it results in an annual yield of about

4.0742% = (1+4%/12)^12-1.

tadPMT and other TVM functions in TADXL accept a nominal rate that is then turned into an effective annual yield depending on compounding periods.

If 4% was to be the annual effective yield, then you would have to get the nominal rate to be used in tadPMT function

And now that I use tadNOMINAL(4%, 1/12) to get the nominal rate, tadPMT reports a monthly payment of £4,348.97

=tadPMT ( tadNOMINAL(4%, 1/12) , 3%, 0%, 12*12+7, 0, 1000000, 1, 0, 1/12, 1/12, 1, 12 )

Gives a monthly payment of £4,348.97