[newbie] financial accounting (2)
 

I'm trying to calculate a formula as follows:

Effective interest rate =
principal amount / (principal amount - interest paid upfront - loan charges)
- 1

I have updated this as:

=(D60/(D60-D62+D63)) -1

Whe
D60 = Principal amount, say ‚¬100,000.00
D62 = interest paid upfront , say 10% of the principal amount, ‚¬10,000.00
D63 = loan charges, say ‚¬2000.00

I am getting a result of 8.7%, whilst when working it out with a calculator
it comes out to around 14% (13.64%).

Any ideas where my mistake is?


MS Excel 2007

[newbie] financial accounting (2)
 

I figured out my math problem.

"Jon" wrote:

I'm trying to calculate a formula as follows:

Effective interest rate =
principal amount / (principal amount - interest paid upfront - loan charges)
- 1

I have updated this as:

=(D60/(D60-D62-D63)) -1

Whe
D60 = Principal amount, say ‚¬100,000.00
D62 = interest paid upfront , say 10% of the principal amount, ‚¬10,000.00
D63 = loan charges, say ‚¬2000.00

I am getting a result of 8.7%, whilst when working it out with a calculator
it comes out to around 14% (13.64%).

Any ideas where my mistake is?


MS Excel 2007