USING A FINANCIAL CALCULATOR TO CALCULATE EFFE

1a) Interest Based on Original Loan Amount

INPUTS

Original Loan Amount PV USD 100

Fees and Commission PV USD 0

Loan Period n Months 3

Nominal Interest Rate i % per month 2

OUTPUTS

Monthly Payment

Monthly Payment - Principal USD -33.33

Monthly Payment - Interest USD -2.00

Monthly Payment - Total USD -35.33

Effective Interest Rate 2.97%

1b) Interest Based on Declining Balance

INPUTS

Original Loan Amount PV USD 100

Fees and Commission PV USD 0

Loan Period n Months 3

Nominal Interest Rate i % per month 2

OUTPUTS

Monthly Payment
Monthly Payment - Principal -32.68

Monthly Payment - Interest -2.00

Monthly Payment - Total USD -34.68

Amount Paid in Interest

Total Paid USD -104.03

Amount Paid in Interest 4.03

Effective Interest Rate 2.00%

2) Interest Deducted Up Front from Original Loan Amount

INPUTS

Total Loan Amount PV USD 100

Loan Period n Months 3

Nominal Interest Rate i % per month 2

OUTPUTS

Amortised Monthly Payment

Amortised Monthly Payment - Principal USD -32.68

Amortised Monthly Payment - Interest USD -2.00

Amortised Monthly Payment - Total USD -34.68

Actual Monthly Payment

Actual Monthly Payment (Principal Only) USD -33.33

Amount Paid in Interest USD -4.03

Original Loan less Interest Payment USD 95.97

 Effective Interest Rate 2.08%

3) Loans with Compensating Balance

INPUTS

Total Loan Amount (including fees) PV USD 100

Loan Period n Months 3

Nominal Interest Rate i % per month 2

Amount Required to be kept on Deposit USD 25

OUTPUTS

Amount Received by Borrower

Amount Received USD 75

Amortised Monthly Payment

Amortised Monthly Payment - Principal USD -32.68

Amortised Monthly Payment - Interest USD -2.00

Amortised Monthly Payment - Total USD -34.68

Effective Monthly Payment

Income Forfeited USD -0.50

Effective Monthly Payment USD -35.18

Payment Schedule

Amount Received 75
Payment Month 1 -35.18
Payment Month 2 -35.18
Payment Month 3 (Final Month - when deposit is returned) -10.18
Internal Rate of Return <=> Effective Interest Rate 4.32%
CULATE EFFECTIVE INTEREST RATES

Please enter figure here

Please enter figure here

Please enter figure here

Please enter figure here

Please enter figure here

Please enter figure here

Please enter figure here

Please enter figure here

Please enter figure here

Please enter figure here

Please enter figure here

Please enter figure here

Please enter figure here

Please enter figure here

Please enter figure here