saziz,

Depends on what you are trying to do.

If you are trying to calculate equal monthly payments (i.e., the same amount
paid each month), then you are not correct. Use the PMT built-in function
to calculate that. Remember that this function expects you to tell it the
interest rate per period, so if you're calculating a monthly payment enter
(7.5% / 12) for the interest rate and (4 x 12) for the total number of
periods. For your example, this turns out to be $241.79. The total
interest you will pay is (241.79 x 48 - 10000), or $1,605.87.

If you are just trying to calculate how much interest you pay in any given
month, then yes, you can multiply the outstanding balance by (7.5% / 12)
(which, by the way, is 0.075 / 12). So the amount of interest you would pay
in the first month is indeed 62.50. However, you only pay have to pay
$179.29 on the principal in the first month.

Good luck!

-- David


"saziz" wrote in
message ...

HI,
I just want to know if I am doing this correct.

I have calculated 7.5% interest on $10,000.00 to be paid in 4 years.
10K times .0075 divided by 12 for months. Which would be 62.50. then
I am adding $200.00 which is going for actual balance payment.
So next month it would be 9,800 times 7.5% divided by 12 months.
Is this correct?
Appreciate your help.
Thank you

Saziz


--
saziz
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