Formulae for calculation - UNECE
[Pages:1]Formulae for calculation of interest, loan repayments and deposits
Fotmula for calculation of compounded interest on deposit
D = initial deposit (D0) r = interest rate, if floating rn is the interest rate in year n n = year Dn = D.(1+r)n at fixed interest rate
Dn = D. (1+r1).(1+r2).(1+r3).... .(1+rn) at floating interest rate
Formula for calculation of standard loan repayments of self amortising loan
L = loan amount r = interest rate, if floating rn is the interest rate in year n n = tenor of the loan (if the repayment period is 6 months, or 3 months, the number of the repayment periods equals the tenor multiplied by 2, or respectively 4, and the interest rate is the interest rate for that period ? 6 or 3 months interest ? i.e. annual rate divided by 2 or 4 respectively) q = current period
end year 1 end year 2
end year 3 ...... end year q
L/n + L.r1 L/n+ ((L-(L.1)/n).r2 L/n+ ((L-(L.2)/n).r3 L/n+ (((L-(L.(q-1))/n).rq
(where L/n is repayment of the principal on equal portions and Lq.rq is repayment of the interest for the period)
Formula for calculation of interest rate payments on self amortising loan (equal repayments of principal)
L = loan amount r = interest rate n = tenor of the loan q = current period
end year 1 end year 2 end year 3 ...... end year q
L.r1
(L-L.1/n).r2 (L-L.2/n).r3
(L-L.(q-1)/n).rq
Total compounded interest payable over the life of the loan = ((L.r.(n+1))/2
Formula for repayment of a loan on equal repayments
L = loan amount r = interest rate n = tenor of the loan (or repayment periods)
Repayment per period = L.(r(1+r)n)/((1+r) n -1)
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