Hello all, I need a wee bit of help with Excel's PMT formula, because I was given a worksheet with two different formulas and I seem to get two different results.
I have the following values:
Loan: 1861.52
APR: 24.99%
Loan Time (in months): 24
So to calculate the interest on the number of "Odd" days (not a full month), I use:
=ROUND(1861.52*(1+24.99/36500)^17,2)
My result is 21.79, which means I get to charge 21.79 in interest for 17 days. With this, the monthly (30 days) interest comes out to be $38.62.
So, 1861.52+21.79 = 1883.31.
So then, I assume they used this formula to calculate the monthly payment with 24.99% APR over 24.99 payments.
=PMT(24.99/1200,24,1883.31,0,0)
The resulting interest over these 24 months comes out to be $550.62, which on a monthly basis is about $21.78 dollars.
Does the PMT() formula use a different method to calculate interest? When I do it manually, my result says that the monthly interest needs to be $38.62...
I could attach the workbook, if need be, but I hope that you can understand it from this post.
Thanks in advance.
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