Originally Posted by

**dexteronline** Taking the problem example Zan posted earlier,

Loan = $60,000

Interest Rate = 5%/4

Terms of the Loan = 3 yrs x 4 = 12

The loan payment when made at the end of quarter is $5,415.50

The loan payment when made at the start of quarter is $5,348.60

Now if we were to find the interest paid in Period 1 or 1st quarter

With End of quarter payment

Interest Paid in first quarter is $750

Principal Paid in first quarter is $4665.50

With Start of quarter payment ( there is no interest paid in the first period )

Interest Paid in first quarter is $0

Principal Paid in first quarter is $5348.64

Well, "start of quarter payment" means payment is made on SAME day as the

loan is taken, so it all starts off with 60000.00 - 5348.64 = 54651.36 owing.

Looks like this:

Code:

QTR PROCEEDS PAYMENT INTEREST BALANCE
01 60000.00 -5348.64 .00 54651.36
02 -5348.64 683.14 49985.86
...
11 -5348.64 66.03 .00

In other words, it's a "ridiculous" arrangement:

that's really a loan of $54,651.36 over 11 quarters.

So use the formula I gave you, but start with A = A - P.