Today in class we worked our way through using of a couple of familiar equations to derive the conventional loan payment equation.
If we replace (P), the principal, on a loan with (A), the present value of an annuity or amount being amortized, then we know
A(1+i)^n = d [((1+i)^n - 1)/i] which after algebra reflects A = d[(1-(1+i)^-n)/i]
If you continue with algebra operations to solve for d using the above equation you get
d = Ai/(1-(1+i)^-n)
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.