Comments on: Amortization Table

By: Dick Kusleika

Dick Kusleika — Tue, 19 Oct 2010 14:45:00 +0000

The 360 day year was invented back when bankers had to use abacuses. That is, it simplified the calculation. They kept it because they make slightly more money than with a 365 day year. 10% stated rate - 10%/365 = 0.02740% daily rate 10%/360 = 0.02778%

APR has to do with compounding. If I charge you 10% on a 1,000 loan, you would pay $100 in interest the first year if I compound annually. If I compound monthly, you pay

=FV(10%/12,12,0,-1000)

= $1,104.71 or 10.471% APR. That's because in the second month, you're paying interest on the interest you accrued in the first month (as well as the principle). In the third month, you're paying interest on the interest you accrued in the first two months.

Daily on a 360 day year would be

=FV(10%/360,360,0,-1000)

= $1,105.16 or 10.516% APR

By: Mary

Mary — Tue, 19 Oct 2010 01:12:00 +0000

I am trying to understand why my bank didn’t have the same payoff amount as me, and it looks like maybe it has something to do with the 360 day year and APR?? The payoff amount I had calculated was based off an Excel Amortization Table template from Microsoft. Can you explain the 360d day year and APR??

By: ravindra

ravindra — Sun, 05 Sep 2010 19:23:00 +0000

hi, can any body help me with the ammortization schedule which will calculate interest on daily basis.

By: Madhava

Madhava — Thu, 12 Feb 2009 12:49:00 +0000

Hi,

Eventhough i was little bit finance savy, I was facing little difficult to make amortisation table. I was always using standard one, which developed by some one.

It's is very helpful.

Similar way, private banks are giving @ flat rate and still they say reducing balance. How to do that? Pl. help us

Regards,

Madhava

By: Dick Kusleika

Dick Kusleika — Fri, 12 Dec 2008 15:56:00 +0000

=PMT(0.07/12,240,FV(0.07,10,0,-150000),0)

The FV part computes the present value argument to payment. It accrues interest on a $150k loan for 10 years at 7% with no payment. Then the PMT function handles the next 240 months.

By: Tag Gallaher

Tag Gallaher — Thu, 11 Dec 2008 21:00:00 +0000

I’m searching for the right formula to determine payments on a loan with an interest-only period… i.e. 30 year loan, years 1-10 are interest only, then a rate of 7% applies for the remainder of the life of the loan. Thanks!

By: Dick Kusleika

Dick Kusleika — Fri, 10 Oct 2008 14:00:00 +0000

Brad: In cell A7, put the date the loan started (not the date of the first payment). In cell A8, put the date of the first payment. In A9:A?? put the dates of all the subsequent payments. Then in C8, your interest formula will be

=-FV($D$2/365,A8-A7,0,E7)-E7

and fill that down.

By: Brad C.

Brad C. — Thu, 09 Oct 2008 20:14:00 +0000

Very nice, clear explanation! I need help calculating a monthly payment with interest accruing over a 365 day year. Can this be done with Excel formulas?

By: Shailesh

Shailesh — Tue, 07 Oct 2008 10:40:00 +0000

Hey this has been a great help!! Thank you so much…

By: Haider

Haider — Wed, 10 Sep 2008 03:46:00 +0000

Hi this is haider trying to find a table to calculate the personal loan installments just input the loan amount tenur and rate that give me irr and the pmts and interest on monthly basis
thanks and regards