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mathematical formula for loan amortization. Loans are issued under a variety of terms requiring borrowers to meet myriad repayment conditions. For a 30-year loan with monthly payments n 30 years 12 monthsyear 360 months.
Mortgage Calculations How Loan Amortization Works The Formula Algorithms And Equations Mortgage Calculator Algorithm Equations from www.pinterest.com
The general syntax of the formula is. The NPER function aids us to know the number of periods taken to repay. The payment on a loan can also be calculated by dividing the original loan amount PV by the present value interest factor of an annuity based on the term and interest rate of the loan.
An interest bearing debt is amortized if principal P dollars and interest I dollars are paid over a term of t years at regular payments of p dollars every 1 n th of a year.
N 5 years 12 months 60 total periods. To calculate amortization start by dividing the loans interest rate by 12 to find the monthly interest rate. Amortization Method when a payment is made it must be first applied to pay interest due and then any remaining part of the payment is applied to pay principle. Calculate the interest portion of the payment Formula 131.
