Mortgage with Quarterly Capitalisation & Monthly Payments
I agree. Your rate formula is actually the one I use. When I'm explaining it
to others, I use
$100 rather than $1, because I find they understand it better ($101.15 is an
easier number to understand than $1.0015). I also agree with your choice of
signs. For posterity, we can also show the more general formula:
=Rate(12/CompoundingPeriodsPerYear,0,-1,1+AnnualRate/CompoundingPeriodsPerYear)
Regards,
Fred
"joeu2004" wrote in message
...
On Dec 2, 2:54 pm, "Fred Smith" wrote:
You're looking for problems which don't exist.
Wouldn't be the first time! :-)
You just have to look at the results to realize the validity
of the calculation.
I did just that, and I confirmed that the structure of your solution
is indeed correct. Live and learn!
The daily computation of interest introduces only a slight numerical
error in the end, which of course can be compensated for in real life
by adjusting the last payment.
I would suggest one minor change to your formulation. I would compute
the monthly rate with RATE(3,0,-1,1+6%/4). Arguably, just a style
difference. But I think it is less error-prone than RATE(3,0,1,-1-6%/
4).
Thanks for the clear explanation. I hope the OP benefitted as much as
I did.
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