From the course: Excel: Analyzing and Visualizing Cash Flows

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Visualize the change in principal and interest payment components

Visualize the change in principal and interest payment components

From the course: Excel: Analyzing and Visualizing Cash Flows

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Visualize the change in principal and interest payment components

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- [Instructor] When you pay back a fully amortized loan, every payment has two components: the interest for the period and enough principle to pay off the loan within a specified period. In this movie, I'll show you how to visualize the trade-off between principle and interest in your payments. My sample file is the Chart Principle and Interest workbook and you can find it in the Chapter03 folder of the Exercise Files collection. In this workbook, I have calculated the interest and principle components of a loan that we see details for on the left side of the worksheet. So, this is a 24 period loan and I assume it's a two year construction loan paid off monthly. The rate for such a short-term loan is usually fairly high. In this case, I'm assuming 10.25%. The loan was for $350,000, we're going to pay it all off, and the payment is made at the end of a period. Then, in columns E and F, I have calculated the interest and principle components of each payment. What I'd like to do is to…

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