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financial question?*

How much interest I will end up paying on a $10,000 if the interest that the bank if offering is 2.99% Fixed APR until full balance paid. The montly payment is $300/month. Wht is the formula to calculate this interest?

Answers:

1) 35 months to pay it off loan will cost you $10467.65

2) The Term is 35 Months. The Monthly Payment will be $298.71 The Amount of interest is $454.85 The formula for calculating the payments and interest is as follows: First you must define some variables to make it easier to set up: • P = principal, the initial amount of the loan • I = the annual interest rate (from 1 to 100 percent) • L = length, the length (in years) of the loan, or at least the length over which the loan is amortized. The following assumes a typical conventional loan where the interest is compounded monthly. First I will define two more variables to make the calculations easier: • J = monthly interest in decimal form = I / (12 x 100) • N = number of months over which loan is amortized = L x 12 Okay now for the big monthly payment (M) formula, it is: J M = P x ------------------------ 1 - ( 1 + J ) ^ -N where 1 is the number one (it does not appear too clearly on some browsers) So to calculate it, you would first calculate 1 + J then take that to the -N (minus N) power, subtract that from the number 1. Now take the inverse of that (if you have a 1/X button on your calculator push that). Then multiply the result times J and then times P. Sorry, for the long way of explaining it, but I just wanted to be clear for everybody. The one-liner for a program would be (adjust for your favorite language): M = P * ( J / (1 - (1 + J) ** -N)) So now you should be able to calculate the monthly payment, M. To calculate the amortization table you need to do some iteration (i.e. a simple loop). I will tell you the simple steps : Step 1: Calculate H = P x J, this is your current monthly interest Step 2: Calculate C = M - H, this is your monthly payment minus your monthly interest, so it is the amount of principal you pay for that month Step 3: Calculate Q = P - C, this is the new balance of your principal of your loan. Step 4: Set P equal to Q and go back to Step 1: You thusly loop around until the value Q (and hence P) goes to zero.

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