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Lending
Loans with a constant amount paid towards Principal
• BAL
k
= remaining balance after time period k.
• CPMT = Constant payment to principal.
• BAL
k
= PV - (k x CPMT)
• Kth payment to interest = i (BAL
k
) = (PMT
i
)
k
• Kth total payment = CPMT + (PMT
i
)
k
Add-On Interest Rate to APR
• r = add-on rate as a decimal.
• n = number of monthly payments.
• APR = 1200i, where i is the solution in the following equation:
Add-On to APR with Credit Life
• CL = credit life as decimal.
• AMT = loan amount.
• FC = finance charge.
•
•
n
1
n
12
------ r+
-------------------
11i+()
n–
–
i
------------------------------=
1
n
12
------
r+
1
n
12
------
– CL
n
12
------
2
– CL r×
---------------------------------------------------------------
G
n
---- P M T=
GCLn××
12
---------------------------- =
amount of credit life