Compound interest calculation

**forsterbuilder** · 04-25-2012, 12:39 PM

Hi,

I am new to the forum and have encountered a prob

I have borrowed £14000 from a friend and have agreed to pay it back over 5 years at 5% compound interest

Could someone please help me with a calculation, that would tell me how much I'm paying each month over the 60 months?

I dont mind if I manually have to change the starting value each month on the spreadsheet to find out how much I will be paying that month (as it will be incorporated into a profit/loss account for my business

Your help in this matter is greatly appreciated

**Cutter** · 04-25-2012, 01:05 PM

I think you want the PMT() function.

=PMT(.05/12,60,14000) which results in -264.20

Here is a link:
http://www.excelfunctions.net/Excel-Pmt-Function.html

**roki4** · 04-25-2012, 06:31 PM

What is the compounding period? Annual? Quarterly? Monthly? Weekly? Etc...

My assumption is that your compounding period is annual and that you want to make equal payments for 60months until the loan is paid down to zero. In that case, your monthly rate is £297.80.

Your formula for total owing amount: Total = Principal x (1 + r) ^ n
R= interest rate
N= compounding periods