I have a $1500 note receivable at 8.25% monthly, amortized over 24 monthly (monthly payment: $145.45), and a $1500 note payable at 5.25% monthly (monthly payment: $111.37), amortized over 24 months. The difference between the payments is $34.08. Since everything else is equal but the interest rate, shouldn't I be able to arrive at $34.08 by finding the payment for a $1500 loan at 3% monthly, amortized over 24 months? I doesn't seem to work out that way. Thanks!!!!!
How to calculate this?
Oct 08, 2006
5 Replies
If you graph the results (including two at intermediate rates - say 6.25% and 7.25%) you will see that the relationship of the payments is not linear. The compounding effect of the interest rates accounts for this.
Cheers, Rusty
What equation(s) do I use?
In Excel you can use the PMT function.
If you don't have Excel let me know and I'll give you the answers.
Cheers, Rusty
I don't have Excel. Thanks!!!
Firstly, I should have said the relationship between the dollar difference in payments is not linear.
The answers for the various interest rates are;
8.25% 145.45 7.25% 133.67 6.25% 122.29 5.25% 111.37 4.25% 100.91 3.00% 88.57Hope this helps, Rusty
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