By Admin on Jul 14, 2009 in Mathematics
C K asked:
here is a small sample of the factor numbers i get from a book:
MONTHLY PAYMENT FACTORS
Payments per $1000
Amortization payment in years
interest rate– in 1 year—-in 2 years—-in 3 years—in 4 years
——-7%——–86.5267- – -44.7726- – -30.8771- – -23.9462
—–10%——–87.9159- – -46.1449- – -32.2672- – -25.3626
in the first line with the interest rate at 7% in one year the factor # is 86.5267, this number you have to divided by 1000 because is the “Loan Constant” and then the answer you have to multiplied by the Loan Amount and you get the monthly payment. in this case:
86.5267 / 1000 Loan Constant = 0.0865267 X $50000 Loan Amount = monthly payment $4,326335
here is a small sample of the factor numbers i get from a book:
MONTHLY PAYMENT FACTORS
Payments per $1000
Amortization payment in years
interest rate– in 1 year—-in 2 years—-in 3 years—in 4 years
——-7%——–86.5267- – -44.7726- – -30.8771- – -23.9462
—–10%——–87.9159- – -46.1449- – -32.2672- – -25.3626
in the first line with the interest rate at 7% in one year the factor # is 86.5267, this number you have to divided by 1000 because is the “Loan Constant” and then the answer you have to multiplied by the Loan Amount and you get the monthly payment. in this case:
86.5267 / 1000 Loan Constant = 0.0865267 X $50000 Loan Amount = monthly payment $4,326335
is there any way to find out how it is developed the factor number for any interest rate and any year with a simple formula?
The formula to compute the payment on a standard installment loan (fixed payment with fixed interest) is:
Pmt = (i x Amt x (1+i)^n) / ((1+i)^n – 1)
Pmt is the fixed payment
Amt is the loan amount (initial principal)
i is the interest rate PER PERIOD (since most loans are payed back monthly, divide the annual percentage by 12)
n is the number of payment periods (again, for monthly payments, multiply the loan period in years by 12).
To find the factor that you were looking for originally, just insert the value of $1000 in the Amt variable. This will give you the payment per thousand dollars of principal. (Notice that the equation is linear relative to Amt so you will then be able to scale the $1000 payment to any value of loan you like.)
dansinger61 | Jul 17, 2009 | Reply
number 61 has it correct — but if you are lazy like me you can buy a texas instrument bs ii plus at walmart for less than 50 busks and it will do all kinds of things.
ed m | Jul 19, 2009 | Reply