How to calculate a monthly payment for a loan

Assignment Help Financial Accounting

Reference no: EM132475679

Question 1: How to calculate a monthly payment for a loan. A related formula is to calculate the amount accruing when regular payments are made into an interest bearing account - often called the Savings Plan formula.

(A is the accrued amount after t years of making regular payments, PMT, into an account at interest rate, r%, compounded n times each year.)

A(t) = PMT·((1 + r/N)N·t - 1)/(r/N)

= PMT*((1 + r/N)^(N*t) - 1)/(r/N)

The second version is essentially in the form used in Excel

Question 2: Suppose you want to buy a car and have decided that you can save $100 a month. Using information from an internet source, how do determine the interest rate?

Reference no: EM132475679

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