Why does the bank's interest rate differ from the normal compound interest formula FV=PV(1+i)^n ? - principal and interest loan calculator
Taking into account the following variables:
Home: $ 5000
Interest rate: 16% per year
Loan Duration: 1 years
Monthly payment of compound interest formula FV = PV (1 + i) ^ n (FV = future value, PV = principal, i = interest rate n = number of periods) is $ 483.30 per month.
But when I use the computer of the bank:
http://www.commbank.com.au/tools/pl_calculators/aspcalculator/repayments.asp
Who said that the loan will be $ 453.65.
Also, when I look at the monthly payments at $ 483.33 rate for Microsoft Excel () as follows:
Price = (12-G6, B6) * 12
I get an interest rate of 28%
Please can someone explain how the bank is different from the formula and how to get an interest rate of a bank to calculate?
Sunday, January 24, 2010
Principal And Interest Loan Calculator Why Does The Bank's Interest Rate Differ From The Normal Compound Interest Formula FV=PV(1+i)^n ?
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3 comments:
Just because the banks are heavy.
16% of Annam, but is calculated on a daily basis.
Division database is very simple, the annual fee on the number of days per year, but if you calculate the APR, want to use the increase to be made larger than the 16%
if they calculated correctly.
never win with banks.
You use the wrong formula to develop the monthly payment for a loan. You need the pension formula. With bank loans, the payment of a fixed amount with the main part is growing each month and the interest portion will decrease by the same amount per month. The formula for the compound derived from various assumptions and it is inappropriate for calculating loan repayments.
You need the formula
P/P0 = (I) / (1 - (1 + i) ^-n), where P is the monthly payment is P0, the original loan amount, n i is the periodic rate and the number of periods. Note: i and N must be compatible. If n for months, then i is the monthly rate, which is the annual rate/12.
Looking at the numbers, P0 = 5000, i = .16/annum = .013333/month and in 12 months
P = 5000 (.0133333) / (1 - (1.0133333) ^ -12)) = 453.65, which agrees with the site CommBank and an interest rate of 16% per year.
Thus the Bank are not different from the norm formula, which used the wrong formula to calculate the monthly payment.
If youWith a loan amount, the number of months and the monthly payment, you can adjust the formula to ensure the income and interest rates that the bank is not "suspicious." And it is loaded in favor of the bank, it uses the same formula to calculate pension payments if you pay a fixed annuity. So, if the Bank is supporting a case that favors the other cases.
You use the wrong formula to develop the monthly payment for a loan. You need the pension formula. With bank loans, the payment of a fixed amount with the main part is growing each month and the interest portion will decrease by the same amount per month. The formula for the compound derived from various assumptions and it is inappropriate for calculating loan repayments.
You need the formula
P/P0 = (I) / (1 - (1 + i) ^-n), where P is the monthly payment is P0, the original loan amount, n i is the periodic rate and the number of periods. Note: i and N must be compatible. If n for months, then i is the monthly rate, which is the annual rate/12.
Looking at the numbers, P0 = 5000, i = .16/annum = .013333/month and in 12 months
P = 5000 (.0133333) / (1 - (1.0133333) ^ -12)) = 453.65, which agrees with the site CommBank and an interest rate of 16% per year.
Thus the Bank are not different from the norm formula, which used the wrong formula to calculate the monthly payment.
If youWith a loan amount, the number of months and the monthly payment, you can adjust the formula to ensure the income and interest rates that the bank is not "suspicious." And it is loaded in favor of the bank, it uses the same formula to calculate pension payments if you pay a fixed annuity. So, if the Bank is supporting a case that favors the other cases.
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