|2. ||Obtain the monthly payment amount. |
The following annuity formula is used to calculate the monthly payment amount:
A =PV ÷ ((1+i)^n - 1) ÷ (i x (1+i)^n)
Note In this formula, A represents the payment amount, PV represents the principal, i represents the Interest rate (monthly), and n represents the number of payments.
In this example, PV is equal to 10130.64, i is equal to 0.016667 (.2 ÷12), and n is equal to 60. Therefore, A is equal to 268.40 (268.3999981).
Note The last payment amount is performed a decimal adjustment. Therefore, the data in the last line is as follows:
|Payment ||Due Date ||Payment Amount ||Principal ||Interest ||Principal Balance |
|60 ||4/12/2012 ||$268.32 ||$263.92 ||$4.40 ||$0.00 |