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Formula for calculating interest payments?

  1. #1
    Jack Shearer
    Guest

    Formula for calculating interest payments?

    Hello

    My first post to this news group.

    Please excuse a novice question but could someone please advise which
    formula I should use to calculate the monthly/fortnightly payments which
    would need to be made on an interest only loan.

    I have used PMT and IPMT but my results don't quite correspond with other
    online calculators. I really would like to be able to develop my own
    calculations in Excel and be confident the resultrs are reasonably accurate.

    Thanks for your advice.

    Jack



  2. #2
    Ron Rosenfeld
    Guest

    Re: Formula for calculating interest payments?

    On Mon, 14 Mar 2005 14:17:31 GMT, "Jack Shearer" <[email protected]> wrote:

    >Hello
    >
    >My first post to this news group.
    >
    >Please excuse a novice question but could someone please advise which
    >formula I should use to calculate the monthly/fortnightly payments which
    >would need to be made on an interest only loan.
    >
    >I have used PMT and IPMT but my results don't quite correspond with other
    >online calculators. I really would like to be able to develop my own
    >calculations in Excel and be confident the resultrs are reasonably accurate.
    >
    >Thanks for your advice.
    >
    >Jack
    >


    if it is an interest-only loan, then the payments would be given by the
    formula:

    =Interest_rate_per_period * Principal

    So if your interest is quoted as yearly but your payments are monthly, you
    would divide that number by 12.


    --ron

  3. #3
    Fred Smith
    Guest

    Re: Formula for calculating interest payments?

    Interest only means you are not paying down any principal. You are paying
    only the interest charged in a period. Therefore you can't use the financial
    functions, because they all assume you will have the loan paid off by the
    end of the term.

    In your case, to calculate the monthly interest charge, use:

    =AnnualRate * Principal / 12

    To calculate the fortnightly charge:

    =AnnualRate * Principal / 26

    --
    Regards,
    Fred
    Please reply to newsgroup, not e-mail


    "Jack Shearer" <[email protected]> wrote in message
    news:%[email protected]...
    > Hello
    >
    > My first post to this news group.
    >
    > Please excuse a novice question but could someone please advise which
    > formula I should use to calculate the monthly/fortnightly payments which
    > would need to be made on an interest only loan.
    >
    > I have used PMT and IPMT but my results don't quite correspond with other
    > online calculators. I really would like to be able to develop my own
    > calculations in Excel and be confident the resultrs are reasonably
    > accurate.
    >
    > Thanks for your advice.
    >
    > Jack
    >
    >




  4. #4
    Jack Shearer
    Guest

    Re: Formula for calculating interest payments?

    Thanks guys.

    Of course this is the method. Benn quite a while since I worked with
    figures and was looking for a complicated process. Well that's my excuse
    and I'm sticking to it.

    Jack

    "Jack Shearer" <[email protected]> wrote in message
    news:%[email protected]...
    > Hello
    >
    > My first post to this news group.
    >
    > Please excuse a novice question but could someone please advise which
    > formula I should use to calculate the monthly/fortnightly payments which
    > would need to be made on an interest only loan.
    >
    > I have used PMT and IPMT but my results don't quite correspond with other
    > online calculators. I really would like to be able to develop my own
    > calculations in Excel and be confident the resultrs are reasonably

    accurate.
    >
    > Thanks for your advice.
    >
    > Jack
    >
    >




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