Re: Present value formula

It is called a retrospective method of finding loan outstanding.

Re: Present value formula

Quote:

Originally Posted by

**downthesun01** Nevermind, I found a formula. For anyone interested it's

$\displaystyle BAL_{k}=PV(1+i)^{k}-(PMT*\frac{(1+i)^{k}-1}{i})$

Notice that formula is a combination of 2 formulas: FV of AMOUNT less FV of PAYMENTS.

Works like this (looking at it as 2 accounts):

Code:

` LOAN SAVINGS`

YR INT(8%) BALANCE PAYMENT INT(8%) BALANCE

0 30000.00 .00

1 2400.00 32400.00 2000.00 .00 2000.00

2 2592.00 34992.00 2000.00 160.00 4160.00

So what is owing after 2 years: 34992 - 4160 = 30832