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My goal is to make a graph using this formula for all possible monthly payments.

Let's say...

Loans: 21750
Monthly Payment: 220
Daily Interest: 4.0% / 365

What formula would I use to get the total amount of money (or Principal) I'd use to pay off this loan at this rate?

Vongdarakia
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1 Answers1

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Since the compounding period and payment period differs (Compounded Daily vs Paid Monthly), you need to find the effective interest rate for one payment period (month).

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This means that each month you pay 0.33387092772% of the outstanding principal as interest.

Then use this formula to find the number of months:

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Where PV = 21750, Pmt = 220, i = 0.0033387092772

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That gives 120 Months.

Depending on the day count convention, (30/360 or 30.416/365 or Actual/Actual), the answer may differ slightly. Using Financial Calculator gives extremely similar answer.

The total cash paid in the entire course of the loan is 120 x $220 = $26,400

base64
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