USING A SPREADSHEET TO CALCULATE EFFECTIVE INTE
1a) Interest Based on Original Loan Amount
INPUTS Original Loan Amount Fees and Commission Loan Period Nominal Interest Rate PV PV n i USD USD Months % per month 100 0 3 2
OUTPUTS Monthly Payment Monthly Payment - Principal Monthly Payment - Interest Monthly Payment - Total USD USD USD -33.33 -2.00 -35.33
Total Amount Paid Total Paid (Principal plus Interest) Total Paid (Interest only) -106.00 -6.00
Effective Interest Rate
2.97%
1b) Interest Based on Declining Balance
INPUTS Original Loan Amount Fees and Commission Loan Period Nominal Interest Rate PV PV n i USD USD Months % per month 100 0 3 2
OUTPUTS Monthly Payment Monthly Payment - Total USD -34.68
Total Amount Paid Total Paid (Principal plus Interest) Total Paid (Interest only) USD -104.03 -4.03
Effective Interest Rate
2.00%
2) Interest Deducted Up Front from Original Loan Amount
INPUTS Total Loan Amount Loan Period Nominal Interest Rate PV n i USD Months % per month 100 3 2
OUTPUTS Amortised Monthly Payment Amortised Monthly Payment - Principal Amortised Monthly Payment - Interest Amortised Monthly Payment - Total USD USD USD -32.68 -2.00 -34.68
Actual Monthly Payment Actual Monthly Payment (Principal Only) Amount Paid in Interest Original Loan less Interest Payment USD USD USD -33.33 -4.03 95.97
Effective Interest Rate
2.08%
3) Loans with Compensating Balance
INPUTS Total Loan Amount (including fees) Loan Period Nominal Interest Rate Amount Required to be kept on Deposit PV n i USD Months % per month USD 100 3 2 25
OUTPUTS Amount Received by Borrower Amount Received USD 75
Amortised Monthly Payment Amortised Monthly Payment - Principal Amortised Monthly Payment - Interest Amortised Monthly Payment - Total USD USD USD -32.68 -2.00 -34.68
Effective Monthly Payment Income Forfeited Effective Monthly Payment USD USD -0.50 -35.18
Payment Schedule Amount Received Payment Month 1 Payment Month 2 Payment Month 3 (Final Month - when deposit is returned) 75 -35.18 -35.18 -10.18
Internal Rate of Return <=> Effective Interest Rate
4.32%
EFFECTIVE INTEREST RATES
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