LOAN AMT - 35000
FLAT RATE - 30%
EQUIVALENT REDUCING RATE - 47.82%
TENURE - 36 MONTHS
EMI - 1847
Well, I find that terminology misleading. The "equivalent reducing
rate" is the annual interest rate; the monthly interest rate is 47.82%/
12. The "flat rate" is the total interest (31507) as a percentage of
the loan divided by the number of years.
By the way, if the monthly payment is truly 1847, not 1847.20, and
monthly is truly rounded (as you indicate below), the last payment
will be 1862.
1ST DUE - PRINCIPAL- 452 + INTEREST 1395 - EMI 1ST - 1847
2ND DUE - PRINCIPAL - 470 + INTEREST 1377 - EMI 2ND - 1847
3RD DUE - PRINCIPAL 489 + INTEREST 1358 EMI 3RD - 1847
CAN ANYONE TEACH ME HOW THIS CALCULATION IS MADE.
The monthly payment can be computed as follows:
=round(pmt(47.82%/12, 36, -35000), 0)
If A1 is the loan amount (35000), A2 is the number of payments (36),
and A3 is the annual interest (47.82%), then A4 is the periodic
payment computed as follows:
=round(pmt(A3/12, A2, -A1), 0)
On a monthly basis.... The first interest payment is 35000 * 47.82%/
12, apparently rounded. The principal paid is 1847 - 1395. The
remaining balance is 34548 (35000 - 452). The second interest payment
is 34548 * 47.82%/12, rounded. The principal paid is 1847 - 1377.
The remaining balance is 34078. And so forth.
You can set up an amortization schedule in Excel as follows.
D6: =A1 (initial loan)
A7: 1 (payment number)
B7: =round(D6*$A$3/12,0) (interest payment)
C7: =$A$4-B7 (principal payment)
D7: =D6+C7 (remaining balance)
Drag or copy A7
7 through A42
42; that is, until payment 36.
Note that the remaining balance in D42, if any, is additional
principal to be paid. The formula in column C could be changed to
reflect that.
The total interest can be computed in B44 as the sum of the periodic
interest:
=sum(B7:B42)
The "flat rate" can be computed as follows (formatted as Percentage):
=B44 / A1 / (A2 / 12)
which is the same as:
= 12 * B44 / A1 / A2
HTH.
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