Calculating Loan Payments

Calculating Loan Payments

r(1 r)n Formula A P (1 r)n 1

A = Payment Amount (what we are trying to find) P = Principal (loan amount) r = interest rate per period (decimal form) n = total number of payments (total time period)

r(1 r)n Formula A P (1 r)n 1

Car loan of $15,000 for 4 years at 6%. P = 15,000 r = 6/12 = .5% = .005 as a decimal n = 4 x 12 = 48 Monthly Payment = $352.28 Total of Monthly Payments = $16,909.44

r(1 r)n Formula A P (1 r)n 1

Credit Card debt of $5,000 paid over 5 years at 18% P = 5,000 r = 18/12 = 1.5% = .015 as a decimal n = 5 x 12 = 60 Monthly Payment = $126.97 Total of Payments = $7,618.20

Using Finance App on TI -84

Credit Card debt of $5,000 paid over 5 years at 18% N = Term = 60 PV = 5000 I% = 18 as a percent FV = 0 P/Y = 12 C/Y = 12

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