Do you have a formula for computing the nominal interest rate for declining
balance calculations?
On Sun, Jan 25, 2015 at 9:17 AM, Mark Mirasol <markmira...@teammicro.net>
wrote:
> Thank you, sughosh. So if we wish to earn 20% interest over 25 weeks for
> our loans, we have to compute the nominal interest rate. The nominal
> interest rate for flat rate and declining balance is not the same.
> On Jan 23, 2015 8:57 PM, "Sughosh Bharadwaj" <
> sugh...@confluxtechnologies.com> wrote:
>
>> Hello Mark,
>>
>> If the interest type is flat, it is always calculated on the disbursed
>> principal.
>> In your case,no matter how much amount is repaid, your interest is always
>> calculated on 6000
>>
>> Whereas, in declining balance, interest is always calculated on the
>> outstanding principal.
>> i.e interest keeps reducing down the installments,which is the correct
>> behavior.
>> If you have repaid principal amount of 1000,then interest for the next
>> installment will be calculated on
>> amount of 5000 and so on.
>>
>> Regards,
>> Sughosh
>>
>> On Fri, Jan 23, 2015 at 4:56 PM, Mark Mirasol <markmira...@teammicro.net>
>> wrote:
>>
>>> Hello Ed,
>>>
>>> We tried to create a P6000 today with a term of 25 weeks and a
>>> 41.6%/year nominal rate. This should give us a total interest of 6000 *
>>> .416/52 * 25 = P1200.
>>>
>>> If the interest calculation method is flat, our total interest is P1200.
>>> However, if the interest calculation method is declining balance, our
>>> total interest is not equal to P1200.
>>>
>>> Shouldn't the total interest be the same regardless of calculation
>>> method?
>>>
>>> Please advise.
>>>
>>> --
>>>
>>> *Mark Philippe L. Mirasol**IT Project Manager*
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--
*Mark Philippe L. Mirasol**IT Project Manager*
*TEAMMICRO*
Mobile: +63 9173008873
Email: markmira...@teammicro.net
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