(It’s interesting that the acronym for remembering the mortgage variables is PAiN!) Here, the aim is to calculate what the regular repayment is per period to service and pay off a debt over a given amount of time.įor example, if I borrow $300,000 over 25 years at an interest rate of 6% per annum, what will my regular monthly payments be (assuming no change of rate)? This is often referred to as the mortgage calculator. Problem 1: Minimum payment calculations (PAiN relief) All of the following examples are considered further (including when payments are made “in advance”) in the attached Excel file. The mathematical alternatives work without relying upon this add-in using no more than the standard operators plus the LOG function on occasion.įor simplicity, the discussion below focuses on scenarios where payments are made at the end of each period (ie, payments are “in arrears”). This is because some of the useful functions (eg, CUMPRINC) are not in the “basic” Excel function directory for some versions of Excel. It addresses three common calculations using Excel’s financial functions for the last item.įor completeness, my examples include the seemingly more convoluted mathematical formulas that arrive at the same answer. This article considers how to model debt repayment calculations from a practical perspective. The start of a new year is a time for planning, renewal, and figuring out how to pay off that holiday debt.
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