Home |
Search |
Today's Posts |
#1
|
|||
|
|||
FV Function (Excel)
I have a loan that I知 trying to calculate which is better 26 partial payments or 12 full payments. I know the 2 extra payments should reduce my overall loan amount.
I知 trying to calculate the remaining balance after 12 months using the following excel function (FV) FV(8.544%/12,12,250.08,-16782.92) this value results in 15,153.05 which is what I expected. However, when I use the same logic for 26 partial payments FV(8.544%/12,26,125.04,-16782.92) I get 16,625.14 |
#2
Posted to microsoft.public.excel.misc
|
|||
|
|||
FV Function (Excel)
On Mon, 27 Feb 2012 14:26:26 +0000, Tinman4 wrote:
I have a loan that I知 trying to calculate which is better 26 partial payments or 12 full payments. I know the 2 extra payments should reduce my overall loan amount. I知 trying to calculate the remaining balance after 12 months using the following excel function (FV) FV(8.544%/12,12,250.08,-16782.92) this value results in 15,153.05 which is what I expected. However, when I use the same logic for 26 partial payments FV(8.544%/12,26,125.04,-16782.92) I get 16,625.14 Since you are making 26 payments instead of 12, your interest rate per period needs to be 8.544%/26, for the second formula. |
#3
Posted to microsoft.public.excel.misc
|
|||
|
|||
FV Function (Excel)
"Tinman4" wrote:
I have a loan that I'm trying to calculate which is better 26 partial payments or 12 full payments. I know the 2 extra payments should reduce my overall loan amount. I'm trying to calculate the remaining balance after 12 months using the following excel function (FV) FV(8.544%/12,12,250.08,-16782.92) this value results in 15,153.05 which is what I expected. However, when I use the same logic for 26 partial payments FV(8.544%/12,26,125.04,-16782.92) I get 16,625.14 The latter might be FV(8.544%/26,26,125.04,-16782.92). And that does result in a lower first-year balance of 14,889.17. Nonetheless, that might not match your reality. And in any case, it might not result in the "better" loan (a subjective term). The loan with regular monthly payments will fully amortize in 92 months. The loan with regular biweekly payments equal to half the monthly payment will fully amortize in 84 months, and you will pay $731.47 less in total interest. However, some lenders charge an extra set-up fees of $275 to $379, and/or they charge $2 to $5 per transaction -- $356 to $890 for 178 payments. (Ask your lender.) Alternatively, it might be "better" to set up a loan with regular monthly payments and to include an extra monthly payment amount yourself every 12th payment [1]. In that case, the outstanding balance after 12 payments can be computed by: =FV(8.544%/12,12,250.08,-16782.92)-250.08 Such a loan will also fully amortize in 84 months, but you will pay "only" $599.15 less in total interest. Although that is $132.32 more than the loan with regular biweekly payments ($18.90 more per year), it might be "better" because there are no (or less) per-transaction fees. (Your lender might charge a "penalty" for the additional payment amount. But remember: that would be 6 transactions, not 178. Again, ask your lender.) Another advantage: you have the flexibility to suspend the extra payment amount if you fall on hard times, like losing your job. If you prefer the discipline of paying the lesser amount biweekly, consider making a "contract" with yourself to deposit that amount into an existing savings. ----- [1] Possibly better: a loan with regular semi-monthly payments, including an extra monthly payment amount yourself every 24th payment. That loan fully amortizes in 83 to 84 months, and you save $635.10 in total interest. The outstanding balance after 24 payments can be computed by: FV(8.544%/24,24,125.04,-16782.92)-250.08. If that option is available, be sure to ask your lender about extra fees. |
#4
Posted to microsoft.public.excel.misc
|
|||
|
|||
FV Function (Excel)
Clarification....
I wrote: Alternatively, it might be "better" to set up a loan with regular monthly payments and to include an extra monthly payment amount yourself every 12th payment [1]. [....] Although that is $132.32 more than the loan with regular biweekly payments ($18.90 more per year), it might be "better" because there are no (or less) per-transaction fees. That is an __average__ of $18.90 more per year. I was trying to make a point by putting things into perspective. IMHO, about $20 more per year (on average) is not enough of a difference to outweigh the subjective benefits. |
Reply |
Thread Tools | Search this Thread |
Display Modes | |
|
|
Similar Threads | ||||
Thread | Forum | |||
Excel Data Validation/Lookup function does function correcty | Excel Worksheet Functions | |||
copy of excel file not showing formulal/function in the function b | Excel Discussion (Misc queries) | |||
Excel - User Defined Function Error: This function takes no argume | Excel Programming | |||
Adding a custom function to the default excel function list | Excel Programming | |||
When I Import an Access Table With an Excel Function in a Cell it Displays as Text not as a Function in Excel | Excel Programming |