# Mortgage Payment Compounded Monthly. Can't figure out interest rate

• Oct 4th 2010, 05:31 PM
lazerexp
Mortgage Payment Compounded Monthly. Can't figure out interest rate
Here is my formula

Attachment 19185

I know the values of (M), (P) and (n). I want to know (i). This is a formula for a monthly mortgage payment with interest compounded monthly. I know my monthly payment (M), I know my principal (P) and I know my term in months (n). I don't know (i) my interest rate. (i) is APR/12 if that matters. I get as far as dividing both side by (P) and then I ht a road block.

Formula can also be found at How To Calculate Mortgage Payments - Interest and Mortgage Formula Calculation

Thanks!
• Oct 4th 2010, 05:48 PM
lazerexp
This is an explanation of what i am trying to do but i dont want to guess what (i) is
Solve For Interest Rate Based On Payments - Calculating APR By Iteration Solving For Unknown
• Oct 4th 2010, 06:11 PM
bjhopper
calculate interest rate
Hi lazerexp,
Your reference explains fully how to find i when given n , M and P. But you have to start with a guess like 5%/12 and solve the given equation inserting n . You repeat the calculation until it equals M/P.

bjh