interest rate for infinite periodic payment
how do I calculate interest rate for infinite but periodic payments? say I
received $1.2M but have to pay $60k every year, at what interest rate is this possible? |
interest rate for infinite periodic payment
A true APR of 5% will give you a return of $60K on $1.2M per year. At the
end of the year you'll have 1,260,000, you pay out 60,000 and have the $1.2M principal left in hand. Relatively easy to figure out: 60K is what % of 1.2M, or in formula fashion: =60000/1200000 "ifeoma" wrote: how do I calculate interest rate for infinite but periodic payments? say I received $1.2M but have to pay $60k every year, at what interest rate is this possible? |
interest rate for infinite periodic payment
Sun, 2 Dec 2007 06:59:01 -0800 from ifeoma
: how do I calculate interest rate for infinite but periodic payments? say I received $1.2M but have to pay $60k every year, at what interest rate is this possible? If they are *literally* infinite, it means you never pay down the loan, so every dollar is going into interest. (This would be quite unusual.) Your interest amount is then payment = rate * principal, and your interest rate is rate = payment / principal. -- Stan Brown, Oak Road Systems, Tompkins County, New York, USA http://OakRoadSystems.com/ "If there's one thing I know, it's men. I ought to: it's been my life work." -- Marie Dressler, in /Dinner at Eight/ |
interest rate for infinite periodic payment
I'm thinking he may be dealing with something like a trust fund - attempting
to determine what interest rate he needs to achieve with a fixed amount to permit the annual payout without digging into the principal. "Stan Brown" wrote: Sun, 2 Dec 2007 06:59:01 -0800 from ifeoma : how do I calculate interest rate for infinite but periodic payments? say I received $1.2M but have to pay $60k every year, at what interest rate is this possible? If they are *literally* infinite, it means you never pay down the loan, so every dollar is going into interest. (This would be quite unusual.) Your interest amount is then payment = rate * principal, and your interest rate is rate = payment / principal. -- Stan Brown, Oak Road Systems, Tompkins County, New York, USA http://OakRoadSystems.com/ "If there's one thing I know, it's men. I ought to: it's been my life work." -- Marie Dressler, in /Dinner at Eight/ |
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