Monthly interest Rate is 1.5% and the factor for 24 is .5666667
Principal loan is Php218,009.78 payable in 24 equal monthly installments of Php12,353.89. Qouted Interest rate per month is 1.5%. I am wondering how they got the factor of 0.5666667. What is the formula to get the factor? It seems the effective interest is so high.
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A home loan is always considered to be a good debt. So, longer home loan tenure is going to benefit the applicants more. An applicant who is apply for a home loan online, you enjoy the benefit of tax deduction for the entire tenure of the loan.
In case of short term home loans, your house loan EMI amount will be pretty high, so you may not be able to afford it. But you have to repay less to the lender. But in case of long run, your per month repayment will be less and affordable, but you will end up paying much more than what you have actually taken as loan. Your principal amount and your repayment amount will have a huge difference.
final value = principal value x (1+I)^n
I= interest rate for n say 10% it would be 0.10
if n= 1 year then interest rate if
one year interest rate so if 5 years n= 5
if interest rate is monthly then divide year int rate by 12
and increase n by 12 so 5 years equals 60 terms of interest calculation.
cost of equity would be pv + pv * CPI
if CPi was 2.5% as an example
cost of equity for year one= PV + (PV * 2.5/100)
fv = pv*(1+2.5/100)^1
if cpi is different each year then
fv= pv1(1+2.5/100)^1 + pv1(1+cpi2/100)^1 + pv1(1+cpi3/100)^1
If CPI is same for each year then FV = PV (1+0.025)^number of years.
^ 2 is like squared
interest is interest
fixed is calculated yearly on the principle and is paid 365 days time
variable changes and is calculated daily ( 1/365 part of the interest rate ) and added to the remaining principle monthly
so if you have a loan of $1000.00 on fixed interest of 10% , regardless of how much you have repaid in a 12 month period , it is 10% of the principle loaned
with a variable interest the interest rate could be 10% today, 15% in 2 months time or 6% later on
it is variable
to add to that it is calculated on a daily basis (1/365 of 10%) and added to the principle left after receiving a payment on the loan
so for a $1000.00 the interest is added to that principle at the end of the month if there is no loan repayment or is added to the principle balance after a payment
the difference is that a variable interest rate loan will allow you to save money if you pay off well before the period of the loan but will add almost 2 to 3 times the loan if you pay the absolute minimum for the period of the loan
a fixed rate is where you know exactly the total interest to be paid at the end of term
It is a loan repaid in an agreed series of payments, or installments, of some period of time. The payments may be made weekly, monthly, or some other agreed period, over a period of time which may be a few months, or many years.
A mortgage is a type of installment loan.
The repayments may be made against the principal (the amount loaned), principal plus interest (most common arrangement), or some other agreement.
It is possible for loans to eventually make the borrower repay a lot more money than the amount borrowed, if care is not taken to understand the agreement.
Once you're in the TVM solver: On the top line (N=) type in 5 * 12 ENTER for five years of month payments. On the I% lline type in 5.5 / 12 ENTER for the month interest rate. On the PV line type in 18000 ENTER Make sure the FV is 0 and END is highlighted on the bottom line. Move the cursor to the PMT line and press ALPHA [SOLVE] (that's ALPHA ENTER) and see -343.82 for the monthly payment.
This is something you should see your financial institution over, but when i work the math your looking at a 60 month loan total principal divided by # of months in the term i get a $972 monthly payment, $58 going to intrest out of each payment.
The present value of any future monthly (?) stream of payments stretching some 24 years into the future takes into account the time value of money and depends on the interest rate assumed to apply for each month throughout those 24 years.
There are formulae to calc this for an equal monthly payment and a constant interest rate, over the term but for a variable interest rate you need a spreadsheet.
In the simple case of zero interest assumed throughout the term, present value = current principal balance, but for any positive interest rate, the total present value of the future payment stream is less than the current principal balance.