It is called a retrospective method of finding loan outstanding.
Here's the problem that I'm looking at just to add some context to my question:
A borrower would like to borrow 30,000 at 8% for 5 years, but would like to pay only 2,000 for the first two years and then catch up with a higher payment for the final three years. What is the payment for the final three years?
I understand how to solve the problem using a financial calculator. I was just wondering if there is a formula for finding the the future value of the loan after the first two years.
I can write it out as:
Which is fine if I only have to find the FV a couple years into the future.
I know that if there were no payments, it'd simply be:
I'm just wondering if there is a similar formula that takes payments into account.
Thanks
Nevermind, I found a formula. For anyone interested it's
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):
So what is owing after 2 years: 34992 - 4160 = 30832Code: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