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Formulae For Calculation of Interest, Loan Repayments and Deposits

The document contains formulas for calculating interest, loan repayments, and deposits. It provides the formulas to calculate: 1) Compounded interest on a deposit with a fixed or floating interest rate over multiple years. 2) Standard loan repayments on a self-amortizing loan with equal portions of principal repaid each period plus interest on the remaining balance. 3) The interest payment for each period of a self-amortizing loan with equal principal repayments. 4) The total compounded interest payable over the life of a loan. 5) The repayment amount for a loan with equal installments over its tenor.

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43 views1 page

Formulae For Calculation of Interest, Loan Repayments and Deposits

The document contains formulas for calculating interest, loan repayments, and deposits. It provides the formulas to calculate: 1) Compounded interest on a deposit with a fixed or floating interest rate over multiple years. 2) Standard loan repayments on a self-amortizing loan with equal portions of principal repaid each period plus interest on the remaining balance. 3) The interest payment for each period of a self-amortizing loan with equal principal repayments. 4) The total compounded interest payable over the life of a loan. 5) The repayment amount for a loan with equal installments over its tenor.

Uploaded by

harshubhoskar3500
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Formulae for calculation of interest, loan repayments and deposits

Fotmula for calculation of compounded interest on deposit D = initial deposit (D0) r = interest rate, if floating rn is the interest rate in year n n = year Dn = D.(1+r)n at fixed interest rate

Dn = D. (1+r1).(1+r2).(1+r3). .(1+rn) at floating interest rate Formula for calculation of standard loan repayments of self amortising loan L = loan amount r = interest rate, if floating rn is the interest rate in year n n = tenor of the loan (if the repayment period is 6 months, or 3 months, the number of the repayment periods equals the tenor multiplied by 2, or respectively 4, and the interest rate is the interest rate for that period 6 or 3 months interest i.e. annual rate divided by 2 or 4 respectively) q = current period end year 1 L/n + L.r1 end year 2 end year 3 end year q

L/n+ ((L-(L.1)/n).r2 L/n+ ((L-(L.2)/n).r3 L/n+ (((L-(L.(q-1))/n).rq

(where L/n is repayment of the principal on equal portions and Lq.rq is repayment of the interest for the period) Formula for calculation of interest rate payments on self amortising loan (equal repayments of principal) L = loan amount r = interest rate n = tenor of the loan q = current period end year 1 L.r1 end year 2 (L-L.1/n).r2 end year 3 (L-L.2/n).r3 end year q (L-L.(q-1)/n).rq

Total compounded interest payable over the life of the loan = ((L.r.(n+1))/2 Formula for repayment of a loan on equal repayments L = loan amount r = interest rate n = tenor of the loan (or repayment periods) Repayment per period = L.(r(1+r)n)/((1+r) n -1)

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