BUT...if the objective is to calculate the payment (lease) on a loan where a known

amount (scrap value) remains owing after nth payment, then formula is:

P = i[A(1 + i)^n - S] / [(1 + i)^n - 1]

P = periodic payment

A = Amount borrowed

S = Scrap value (known as balloon payment)

i = periodic interest rate

n = number of periods

A simple example: loan of 5000, 12%, 36 months, scrap value 1000; comparing:

Code:

PAYMENT INTEREST BALANCE PAYMENT INTEREST BALANCE
00 5000.00 5000.00
01 -166.07 50.00 4883.93 -142.85 50.00 4907.15
...
36 -166.07 1.64 .00 -142.85 11.32 1000.00