The formula for amortization is based on the formula for calculating the value of an annuity. It can be modified to determine monthly payments, remaining capital, interest paid, and total interest of a loan. The formula for determining the present value of a loan is PV = C/r*(1-1/(1+r)T). The formula can also be used for cushioning and prepayment loans. To determine the monthly payment of an amortization loan, use the loan numbers in the original formula. The formula can also be used to create an amortization schedule and calculate loan information for a specific period.
A formula of amortization is based on the formula to calculate the value of an annuality. Starting from this basic formula, it is possible to determine the monthly payment of a totally amortizable loan. You can modify it even more to obtain formulas that generate the remaining capital, the capital paid in a particular month, the interest paid in a particular month and the total interest of the loan.
The formula to determine the present value of a value is PV = C / r * (1-1 / (1 + r) T). PV es el valor presente, C es el cupón, r es la tasa de interés y T es el número de períodos en la vida del préstamo. One consideration is that the interest fee must be adjusted to adapt to the duration of the period. In general, the fee is given in an annulment contract as an annulled figure. To obtain the interest rate per period, divide the annualized rate by the number of pay periods per year.
This formula is also used as a cushioning formula because the cushioning of the workers works in the same way as the years. When buying an annuality, it interchanges a global sum for the promise of a flow of pagos of the same size in regular periods. In a prepayment loan, the prepayer gives a global sum to the borrower in exchange for a series of monthly payments, in effect, he buys a yearly payment from the borrower.
To determine the monthly payment of an amortization loan, like a mortgage, only use the loan numbers in the original amortization formula. If a borrower obtains a mortgage of $ 300,000 US dollar (USD) from 30 years to 6 percent, for example, you would enchufaría 300,000 for PV. The tasa de interés sería la tasa hipotecaria, 6 por ciento, dividida por 12, which is equivalent to 0.5 por ciento. T sería 30 años multiplicado por 12 pagos por año, que es 360. Luego, puede resolver la ecuación para C, que es el pago monthly del préstamo.
The remaining balance before realizing each payment is multiplied by the periodic interest fee from the monthly payment amount that is intended for interest. The remainder of the payment is allocated to the capital. You can use the basic amortization formula to build an amortization chronogram, which shows the capital requirement that is paid each month. The formula can also be used to derive formulas that allow you to calculate the information contained in an amortization program for a specific period without writing the complete program.
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