Calculating payments on a fully amortized loan


show more Calculating payments on a fully amortized loan provides you with in-depth training on Business. Taught by Curt Frye as part of the Excel 2007: Financial Analysis show less
please wait ...

Calculating payments on a fully amortized loan

Most loans, whether between businesses or made by businesses to individual borrowers, are fully amortized. Fully amortized means that the monthly payments made over the term of the loan pay off the principal and all accrued interest. You can calculate the monthly payments required to pay off a fully amortized loan using the PMT or Payment function. The PMT function has five arguments. The first three arguments, rate, nper, and pv, are all required. Rate is the annual percentage rate divided by the number of payments made each year.

That's usually 12, representing the 12 months. nper is the number of payments you will make on the loan, and present value is the loan principal. The other two optional arguments are fv and type. fv is the future value of the loan, which is 0 in a fully amortized loan, because you pay off the entire amount, and type is zero if your payment is due at the end of a period, that is in arrears or at the beginning of the period, in advance. Most loans are made in arr...

Calculating payments on a fully amortized loan
Video duration: 2m 21s 2h 18m Intermediate

Viewers:

Calculating payments on a fully amortized loan provides you with in-depth training on Business. Taught by Curt Frye as part of the Excel 2007: Financial Analysis

Subject:
Business
Software:
Excel
Author:
please wait ...