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
First reply
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
Read the full reply
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
>Join the Discussion
Have something to add? Share your thoughts — no account required.
Didn't find your answer?
Ask the community — no account required