Calculating Payments

# Calculating Payments

## Calculating Payments

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##### Presentation Transcript

1. Calculating Payments All you have to do is watch this PowerPoint. You may need to refer to it later, so keep it open when you are finished.

2. =PMT(rate,nper,pv,fv,type) • What you see above is the formula for calculating payment. • Each item in parenthesis is an item you have to fill in • This looks very complicated, but when you break it down, it’s really pretty easy!

3. =PMT(rate,nper,pv,fv,type) • Rate is the % you pay on the loan • Nper is how many payments you will make (use months) • Pv is how much you are financing • Fv is how much you will owe when you finish the last payment – usually \$0 • Type is always going to be 1 – meaning you make the payment on the 1st of the month.

4. =PMT(rate,nper,pv,fv,type) The interest rate is shown as 6%, but remember that you don’t pay it all at once – you only pay 1/12th of it at a time, so when you put it in the formula, you do it like this: .06/12 that means 6 percent divided by 12

5. =PMT(rate,nper,pv,fv,type) How much you owe at the end of the loan? • =PMT(.06/12,36,30000,0,1) Payment made on the 1st of the month 36 months 6% interest You’re paying \$30000