156 Appendix B
Lending
Loans With a Constant Amount Paid Towards Principal
BAL
k
= remaining balance after time period k.
CPMT = Constant payment to principal.
BAL
k
= PV − (k x CPMT)
kth payment to interest = i (BAL
k
) = (PMT
i
)
k
kth total payment = CPMT + (PMT
i
)
k
Add-On Interest Rate to APR
r = add-on rate as a decimal.
n = number of monthly payments.
APR = 1200i, where i is the solution in the following equation:
)
i
i
r
n
n
n−
+−
=
+
11
12
1
Add-On to APR with Credit Life
CL = credit life as decimal.
AMT = loan amount.
FC = finance charge.
GAMT
rCL
n
CL
n
r
n
=×
××
−×
−
+
2
1212
1
12
1
PMT
n
G
=
lifecredit ofamount
12
=
×× nCLG
FC = (G − AMT − CL)
Rule of 78's Rebate
PV = finance charge.
I
k
= interest charged at month k.
n = number of months in loan.
()
()
PV
nn
kn
I
k
1
12
+
+−
=
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