How would we do PMT in reverse? For example I’m paying $300 a month, for 72months (6 years), with an interest rate of 5%. What’s the formula to find the total loan amount? (I keep seeing =PV, but I’m confused at how when I use PV, the outcome is a lesser number then if I multiply monthly payment (300) by Term (72 months). How is it more expensive at 0%???? I just want to know how to find a total loan amount when all we know is Monthly payment, Rate, and term.
Hello, I am slightly confused regarding your question. Because of interest charges the PV should be lower. When you multiply $300/mo*72 months you would arrive at $21,600 with 0% interest. So, any interest would equate to a lesser amount actually borrowed. If it is significantly less, remember to convert the interest rate to monthly terms as well (ie .05/12). The formula entered is =PV(0.05/12,72,300) and yields $18,627.83. I hope this helps!
Aaden takes a loan of $250,000 today. He will make payments every two years, starting two years from today, until the loan is paid back 30 years from today. If the effective annual interest rate is 16%, how much will each payment be? What about the exercise with given effective annual rate?
Very nice I'm very satisfied thanks allot
It's very helpful Joshua. Thank you!
How would we do PMT in reverse? For example I’m paying $300 a month, for 72months (6 years), with an interest rate of 5%. What’s the formula to find the total loan amount? (I keep seeing =PV, but I’m confused at how when I use PV, the outcome is a lesser number then if I multiply monthly payment (300) by Term (72 months). How is it more expensive at 0%???? I just want to know how to find a total loan amount when all we know is Monthly payment, Rate, and term.
Hello, I am slightly confused regarding your question. Because of interest charges the PV should be lower. When you multiply $300/mo*72 months you would arrive at $21,600 with 0% interest. So, any interest would equate to a lesser amount actually borrowed. If it is significantly less, remember to convert the interest rate to monthly terms as well (ie .05/12).
The formula entered is =PV(0.05/12,72,300) and yields $18,627.83. I hope this helps!
Aaden takes a loan of $250,000 today. He will make payments every two years, starting two years from today, until the loan is paid back 30 years from today. If the effective annual interest rate is 16%, how much will each payment be?
What about the exercise with given effective annual rate?
How to find t?
How about PPMT formula
Hello, you can use the PPMT if you are curious how much of the payment is being applied to the principal. Thank you!
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Ok