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Thread: Help w/ formula for variable loan amount

  1. #1
    Jan 2010

    Help w/ formula for variable loan amount

    I need to calculate a loan amount that can be reduced by a portion of funds from a separate account.

    I have a known maximum loan amount (say $14MM) and a pool of funds from which funds will be applied to effectively reduce the amount funded (say $5MM). The problem is that, from the pool, I need to set aside an amount that will equal a set number of pmts of the resulting pmt in reserve (say 12 months pmts).

    So, it looks like this:
    Max. Amt - (Pool - Reserve) = Adjusted max; where Reserve = 12* PMT(Adjusted Max)

    The Max Amt, Pool, and Months Reserve (as well as the variables req'd to calc a pmt) are all variable but known prior to this calculation. Is there a way to solve this non-recursively?
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  2. #2
    Dec 2007
    Ottawa, Canada
    Well, put up an example...else, I don't think anyone (me anyway!) will
    understand what you're asking...
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  3. #3
    Jan 2010
    Hmm, I thought that I had included an example. Let me try a different way.

    Max Loan: $14MM
    Pool: $ 5MM
    Mo's Reserve: 12 (# of pmts set aside; based on new loan amt.)
    Pmt. Terms: Can be anything but say 20 years, 8% interest

    Problem restated: The actual loan made shall be reduced by the net Pool funds after deducting the Required Reserve funds from the Pool.

    I need to be able to determine the proper reserve amount on a loan balance that is not known until I know how much is available from the pool. However, I can't determine that until I know what the new loan balance is.

    I hope that I have made this a bit more clear. I can get "close enough" in my spreadsheet, but I am really very curious if there is a way to solve this without a circular reference. It seems to me that it may be possible.

    I appreciate any thoughts on this. Take care.
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