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#1
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360/365, etc.
I need to calculate a monthly payment but the interest method will be 365/365
or 365/360, 30/360, or 30/365. My question is - can I use the PMT function for this? And, if so, what do I put in instead of interest rate/12 to calculate this? Thank you in advance. |
#2
Posted to microsoft.public.excel.worksheet.functions
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360/365, etc.
The interest formula is
P = A * (1 + I/N)**T A = Amount I = Interest N = number of time periods T = periods PMT is just a differnt form of the formula where rate is interest and nper is the time of the loan Lets assum interest is 5% So 365/365 means computing daily interest using 365 days a year for 365 days I = .05, N = 365, T=365 Rate = .05/365 Nper = 365 So 30/360 means you have a 30 year loan with monthly payments. The interest rate formula needs to be recalculated at the end of each month for 360 months Each month the calculation would be I = .05, N = 360, T=30 assuming interest calculated at 365 days a year. USA rules are 360 days a year because each month is a constant 30 days. There are 5 or 6 bank holidays a year The nper rate need to be calculate using the Interest rate for monthly period I = .05 N = 360 T = 30 A = 1 The P (The result of the Interest formula) is the effective interest rate per month Rate = P Nper = 360 (payments) So 30/365 means you have a 30 year loan with monthly payments. The interest rate formula needs to be recalculated at the end of each month for 360 months but the yearly interest rate being calculated 365 days a year Each monthly the calculation would be I = .05, N = 365, T=30 assuming interest calculated at 365 days a year. Non-USA rules are 365 days a year. The nper rate need to be calculate using the Interest rate for monthly period I = .05 N = 365 T = 30 A = 1 The P (The result of the Interest formula) is the effective interest rate per month Rate = P Nper = 360 (payments) The efective interest rate is the key to the differences in the calculations. "sg" wrote: I need to calculate a monthly payment but the interest method will be 365/365 or 365/360, 30/360, or 30/365. My question is - can I use the PMT function for this? And, if so, what do I put in instead of interest rate/12 to calculate this? Thank you in advance. |
#3
Posted to microsoft.public.excel.worksheet.functions
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360/365, etc.
Thank you for your quick response. I'm sorry I haven't replied sooner. You
did an awesome job explaining everything to me, however, when I try your method, I am getting a monthly payment that is millions of dollars. For example, I have a loan amount of $250,000. The interest rate is 9% and it is a 365/365 interest calculation. So, I used the following formula: =250000*(1+9%/365)*365 The monthly payment I am getting back is $91,272,500. I did notice that in the function you gave me there were two ** before the last argument. I wasn't sure if that was a typo - I tried it, though, and Excel wanted to take it out. Do you know what I am doing wrong? Thank you. "Joel" wrote: The interest formula is P = A * (1 + I/N)**T A = Amount I = Interest N = number of time periods T = periods PMT is just a differnt form of the formula where rate is interest and nper is the time of the loan Lets assum interest is 5% So 365/365 means computing daily interest using 365 days a year for 365 days I = .05, N = 365, T=365 Rate = .05/365 Nper = 365 So 30/360 means you have a 30 year loan with monthly payments. The interest rate formula needs to be recalculated at the end of each month for 360 months Each month the calculation would be I = .05, N = 360, T=30 assuming interest calculated at 365 days a year. USA rules are 360 days a year because each month is a constant 30 days. There are 5 or 6 bank holidays a year The nper rate need to be calculate using the Interest rate for monthly period I = .05 N = 360 T = 30 A = 1 The P (The result of the Interest formula) is the effective interest rate per month Rate = P Nper = 360 (payments) So 30/365 means you have a 30 year loan with monthly payments. The interest rate formula needs to be recalculated at the end of each month for 360 months but the yearly interest rate being calculated 365 days a year Each monthly the calculation would be I = .05, N = 365, T=30 assuming interest calculated at 365 days a year. Non-USA rules are 365 days a year. The nper rate need to be calculate using the Interest rate for monthly period I = .05 N = 365 T = 30 A = 1 The P (The result of the Interest formula) is the effective interest rate per month Rate = P Nper = 360 (payments) The efective interest rate is the key to the differences in the calculations. "sg" wrote: I need to calculate a monthly payment but the interest method will be 365/365 or 365/360, 30/360, or 30/365. My question is - can I use the PMT function for this? And, if so, what do I put in instead of interest rate/12 to calculate this? Thank you in advance. |
#4
Posted to microsoft.public.excel.worksheet.functions
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360/365, etc.
=250000*(1+9%/365)^365
** is ^ "sg" wrote: Thank you for your quick response. I'm sorry I haven't replied sooner. You did an awesome job explaining everything to me, however, when I try your method, I am getting a monthly payment that is millions of dollars. For example, I have a loan amount of $250,000. The interest rate is 9% and it is a 365/365 interest calculation. So, I used the following formula: =250000*(1+9%/365)*365 The monthly payment I am getting back is $91,272,500. I did notice that in the function you gave me there were two ** before the last argument. I wasn't sure if that was a typo - I tried it, though, and Excel wanted to take it out. Do you know what I am doing wrong? Thank you. "Joel" wrote: The interest formula is P = A * (1 + I/N)**T A = Amount I = Interest N = number of time periods T = periods PMT is just a differnt form of the formula where rate is interest and nper is the time of the loan Lets assum interest is 5% So 365/365 means computing daily interest using 365 days a year for 365 days I = .05, N = 365, T=365 Rate = .05/365 Nper = 365 So 30/360 means you have a 30 year loan with monthly payments. The interest rate formula needs to be recalculated at the end of each month for 360 months Each month the calculation would be I = .05, N = 360, T=30 assuming interest calculated at 365 days a year. USA rules are 360 days a year because each month is a constant 30 days. There are 5 or 6 bank holidays a year The nper rate need to be calculate using the Interest rate for monthly period I = .05 N = 360 T = 30 A = 1 The P (The result of the Interest formula) is the effective interest rate per month Rate = P Nper = 360 (payments) So 30/365 means you have a 30 year loan with monthly payments. The interest rate formula needs to be recalculated at the end of each month for 360 months but the yearly interest rate being calculated 365 days a year Each monthly the calculation would be I = .05, N = 365, T=30 assuming interest calculated at 365 days a year. Non-USA rules are 365 days a year. The nper rate need to be calculate using the Interest rate for monthly period I = .05 N = 365 T = 30 A = 1 The P (The result of the Interest formula) is the effective interest rate per month Rate = P Nper = 360 (payments) The efective interest rate is the key to the differences in the calculations. "sg" wrote: I need to calculate a monthly payment but the interest method will be 365/365 or 365/360, 30/360, or 30/365. My question is - can I use the PMT function for this? And, if so, what do I put in instead of interest rate/12 to calculate this? Thank you in advance. |
#5
Posted to microsoft.public.excel.worksheet.functions
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360/365, etc.
Sorry - I didn't get that ** was ^. Now when I calculate the payment, I am
still getting payments that are very high - more than the original loan amount. Somehow I always have the knack of making these things more complicated... Anyway, this is what I am doing now: =250000*(1+9%/365)^365. The result I get is 273540.5. I just can't see what I have messed up. "Joel" wrote: =250000*(1+9%/365)^365 ** is ^ "sg" wrote: Thank you for your quick response. I'm sorry I haven't replied sooner. You did an awesome job explaining everything to me, however, when I try your method, I am getting a monthly payment that is millions of dollars. For example, I have a loan amount of $250,000. The interest rate is 9% and it is a 365/365 interest calculation. So, I used the following formula: =250000*(1+9%/365)*365 The monthly payment I am getting back is $91,272,500. I did notice that in the function you gave me there were two ** before the last argument. I wasn't sure if that was a typo - I tried it, though, and Excel wanted to take it out. Do you know what I am doing wrong? Thank you. "Joel" wrote: The interest formula is P = A * (1 + I/N)**T A = Amount I = Interest N = number of time periods T = periods PMT is just a differnt form of the formula where rate is interest and nper is the time of the loan Lets assum interest is 5% So 365/365 means computing daily interest using 365 days a year for 365 days I = .05, N = 365, T=365 Rate = .05/365 Nper = 365 So 30/360 means you have a 30 year loan with monthly payments. The interest rate formula needs to be recalculated at the end of each month for 360 months Each month the calculation would be I = .05, N = 360, T=30 assuming interest calculated at 365 days a year. USA rules are 360 days a year because each month is a constant 30 days. There are 5 or 6 bank holidays a year The nper rate need to be calculate using the Interest rate for monthly period I = .05 N = 360 T = 30 A = 1 The P (The result of the Interest formula) is the effective interest rate per month Rate = P Nper = 360 (payments) So 30/365 means you have a 30 year loan with monthly payments. The interest rate formula needs to be recalculated at the end of each month for 360 months but the yearly interest rate being calculated 365 days a year Each monthly the calculation would be I = .05, N = 365, T=30 assuming interest calculated at 365 days a year. Non-USA rules are 365 days a year. The nper rate need to be calculate using the Interest rate for monthly period I = .05 N = 365 T = 30 A = 1 The P (The result of the Interest formula) is the effective interest rate per month Rate = P Nper = 360 (payments) The efective interest rate is the key to the differences in the calculations. "sg" wrote: I need to calculate a monthly payment but the interest method will be 365/365 or 365/360, 30/360, or 30/365. My question is - can I use the PMT function for this? And, if so, what do I put in instead of interest rate/12 to calculate this? Thank you in advance. |
#6
Posted to microsoft.public.excel.worksheet.functions
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360/365, etc.
The number you are getting is correct. If you put 1.00 for the dollar amount
you will see the results are 1.094 which is the APR. So a 9% loan APR is 9.4%. $250,000.00 * 9% is $22,500. $250,000.00 * 9.4% = $23,500. You pay an extra $1,000.00 a year on the compound interest. $250,000.00 + $23,500 = $273,500.00. You get some rounding errors with the calculations. "sg" wrote: Sorry - I didn't get that ** was ^. Now when I calculate the payment, I am still getting payments that are very high - more than the original loan amount. Somehow I always have the knack of making these things more complicated... Anyway, this is what I am doing now: =250000*(1+9%/365)^365. The result I get is 273540.5. I just can't see what I have messed up. "Joel" wrote: =250000*(1+9%/365)^365 ** is ^ "sg" wrote: Thank you for your quick response. I'm sorry I haven't replied sooner. You did an awesome job explaining everything to me, however, when I try your method, I am getting a monthly payment that is millions of dollars. For example, I have a loan amount of $250,000. The interest rate is 9% and it is a 365/365 interest calculation. So, I used the following formula: =250000*(1+9%/365)*365 The monthly payment I am getting back is $91,272,500. I did notice that in the function you gave me there were two ** before the last argument. I wasn't sure if that was a typo - I tried it, though, and Excel wanted to take it out. Do you know what I am doing wrong? Thank you. "Joel" wrote: The interest formula is P = A * (1 + I/N)**T A = Amount I = Interest N = number of time periods T = periods PMT is just a differnt form of the formula where rate is interest and nper is the time of the loan Lets assum interest is 5% So 365/365 means computing daily interest using 365 days a year for 365 days I = .05, N = 365, T=365 Rate = .05/365 Nper = 365 So 30/360 means you have a 30 year loan with monthly payments. The interest rate formula needs to be recalculated at the end of each month for 360 months Each month the calculation would be I = .05, N = 360, T=30 assuming interest calculated at 365 days a year. USA rules are 360 days a year because each month is a constant 30 days. There are 5 or 6 bank holidays a year The nper rate need to be calculate using the Interest rate for monthly period I = .05 N = 360 T = 30 A = 1 The P (The result of the Interest formula) is the effective interest rate per month Rate = P Nper = 360 (payments) So 30/365 means you have a 30 year loan with monthly payments. The interest rate formula needs to be recalculated at the end of each month for 360 months but the yearly interest rate being calculated 365 days a year Each monthly the calculation would be I = .05, N = 365, T=30 assuming interest calculated at 365 days a year. Non-USA rules are 365 days a year. The nper rate need to be calculate using the Interest rate for monthly period I = .05 N = 365 T = 30 A = 1 The P (The result of the Interest formula) is the effective interest rate per month Rate = P Nper = 360 (payments) The efective interest rate is the key to the differences in the calculations. "sg" wrote: I need to calculate a monthly payment but the interest method will be 365/365 or 365/360, 30/360, or 30/365. My question is - can I use the PMT function for this? And, if so, what do I put in instead of interest rate/12 to calculate this? Thank you in advance. |
#7
Posted to microsoft.public.excel.worksheet.functions
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360/365, etc.
USA congress enacted years aog the "Truth in leading Laws" that basically
required every back to post APR (Actual proimary rate) because banks were putting in ine print exception to the interest rate like 365 instead of 360. I've also answer postings were people wer asking the diference between usa calculation and europen calculations. Europens were getting errors using PMT and didn't understand microsoft was a USA company and was defaulting to USA standards. "sg" wrote: Thank you for your quick response. I'm sorry I haven't replied sooner. You did an awesome job explaining everything to me, however, when I try your method, I am getting a monthly payment that is millions of dollars. For example, I have a loan amount of $250,000. The interest rate is 9% and it is a 365/365 interest calculation. So, I used the following formula: =250000*(1+9%/365)*365 The monthly payment I am getting back is $91,272,500. I did notice that in the function you gave me there were two ** before the last argument. I wasn't sure if that was a typo - I tried it, though, and Excel wanted to take it out. Do you know what I am doing wrong? Thank you. "Joel" wrote: The interest formula is P = A * (1 + I/N)**T A = Amount I = Interest N = number of time periods T = periods PMT is just a differnt form of the formula where rate is interest and nper is the time of the loan Lets assum interest is 5% So 365/365 means computing daily interest using 365 days a year for 365 days I = .05, N = 365, T=365 Rate = .05/365 Nper = 365 So 30/360 means you have a 30 year loan with monthly payments. The interest rate formula needs to be recalculated at the end of each month for 360 months Each month the calculation would be I = .05, N = 360, T=30 assuming interest calculated at 365 days a year. USA rules are 360 days a year because each month is a constant 30 days. There are 5 or 6 bank holidays a year The nper rate need to be calculate using the Interest rate for monthly period I = .05 N = 360 T = 30 A = 1 The P (The result of the Interest formula) is the effective interest rate per month Rate = P Nper = 360 (payments) So 30/365 means you have a 30 year loan with monthly payments. The interest rate formula needs to be recalculated at the end of each month for 360 months but the yearly interest rate being calculated 365 days a year Each monthly the calculation would be I = .05, N = 365, T=30 assuming interest calculated at 365 days a year. Non-USA rules are 365 days a year. The nper rate need to be calculate using the Interest rate for monthly period I = .05 N = 365 T = 30 A = 1 The P (The result of the Interest formula) is the effective interest rate per month Rate = P Nper = 360 (payments) The efective interest rate is the key to the differences in the calculations. "sg" wrote: I need to calculate a monthly payment but the interest method will be 365/365 or 365/360, 30/360, or 30/365. My question is - can I use the PMT function for this? And, if so, what do I put in instead of interest rate/12 to calculate this? Thank you in advance. |
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