Tutoring financial math, spreadsheets might be used. The tutor shows how to find the monthly payment on a loan using Excel.
In yesterday’s post I tell how to find the amount against the principal that a certain payment removes, using the ppmt function.
Perhaps more directly, a person might wonder how to calculate the monthly payment in the first place. Here’s how:
Example: Imagine a 25-year, $100,000 loan at 4% compounded monthly, with monthly payments as well. Find the monthly payment.
Solution: Using Excel, you’d enter
=pmt(4%/12, 300, 100000)
300 means the total number of payments: 12 per year for 25 years. The payment is assumed to be at month’s end.
Hopefully, the answer will come to -527.84, the negative meaning money paid out (as opposed to received).
Jack of Oracle Tutoring by Jack and Diane, Campbell River, BC.