Loan Payments Calculation

Calculator Calculator – simple interest payment  i * principle    1  ^ term   1   1  i        i – interest rate on the loan term – length of time to repay the loan principle – amount borrowed Calculator Calculating the payment is a two-step process: 1. Convert input to term of the loan 2. Calculate the payment Input: Amount of Loan – Principle Term of the Loan – Years Interest Rate – Yearly rate, expressed as a percentage Example: Loan – $15,000 Term – 5 years Interest – 4.9 We want to retain the input for use in display; therefore, we need to have separate variables for the converted data Calculator payment  i * principle    ^ term  1  1    1  i       Calculating the payment i – interest rate, converted to the payment schedule (interest/month - im) term – number of payments (number of months) payment  im * principle    1  ^ months   1   1  im        Calculator Term: Entered as years – needs to be converted to months Interest: Entered as a whole number – needs double conversion First – convert to the decimal equivalent Second – convert to the monthly equivalent months – term of loan in months id – Interest rate in decimal value im – Interest rate in monthly decimal value Calculator Calculate the payment in steps (like in the quadratic problem) Calculate the numerator N  im * principle D1  1 1  im Calculate the embedded term Calculate the denominator D  1  D1^ months Calculate the payment Payment  N D Calculator To calculate the monthly payment is a two–step process: – Convert the input to values appropriate for the payment cycle – Use the converted values to calculate the monthly payment Now that we have a monthly payment, we can calculate the remaining information on the loan: Total Payment – the amount actually paid out of your pocket. Total Interest paid over the life of the loan Calculator Total Payment – the amount actually paid out of your pocket. Total payment is the monthly payment multiplied by the number of payments made over the life of the loan TotalPay = payment * months Total Interest paid over the life of the loan Interest paid is the difference between what you originally borrowed what you pay back TotalInt = TotalPay - principle Calculator To calculate a loan payment, the program should be written with each module completing a given task. One module should do the necessary conversions: Loan length to number of payments (usually that is years to months) Interest rate from a percentage value to the equivalent decimal value, then to the interest rate per payment term (quarter, months, weeks) Calculator To calculate a loan payment, the program should be written with each module completing a given task. One module should do the necessary calculations: payment  im * principle    ^ months  1  1    1  im       Once the payment is calculated, total amount paid and total interest paid can be calculated. These can be part of the payment calculation module.