I need to calculate the present value and current interest payment for a specific period in an annuity. This would easily be done with PV and IPMT except the cash flows are not constant. They increase by .5% every period. I am thinking that this is going to require an array-oriented module, but I'm not sure where to begin. Can anyone offer a bit of starter help? Thanks.
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Complex Financial Calculation
- Thread starter simon1974
- Start date
MichaelRed
Programmer
Some [assembly | explainiation] requeried. Are you just wanting the payment value to ncrease by 1/2 % for each payment throughout the life of the "Loan"? Do you need to calculate (and possibly save / display) the interest 7 principal ammounts (actually applied) for each payment?
What 'rules' apply to the payments? Is the actual ammount of interest charged calculated from the specific payment date (or interval from the previous) or is there a 'grace' period, or is the (actual) payment interval ignored? ...
But -briefly- you are correct that the simplistic financial functions are not going to provide the answer(s). Less briefly, there is MUCH to be learned about the details before proceeding.
MichaelRed
m.red@att.net
There is never time to do it right but there is always time to do it over
What 'rules' apply to the payments? Is the actual ammount of interest charged calculated from the specific payment date (or interval from the previous) or is there a 'grace' period, or is the (actual) payment interval ignored? ...
But -briefly- you are correct that the simplistic financial functions are not going to provide the answer(s). Less briefly, there is MUCH to be learned about the details before proceeding.
MichaelRed
m.red@att.net
There is never time to do it right but there is always time to do it over
- Thread starter
- #3
Yes, the payments (cash flows) increase by 1/2% each period. I need to be able to return (not necessarily save) the interest and principal payments for each period of the annuity. I have done a two tiered annuity where the payment amount changed in the middle of the annuity. In that instance, you simply have to do two annuity calculations, setting the future value of annuity 1 to the present value of annuity 2. In the case where the payment changes every month, it seems that there would be a better way than to visualize each period as a discreet annuity unto itself. The annuity I am looking at is 30 years, so we would have a cumbersome calculation of 360 annuities, which I don't want to do. Any help you can provide would be appreciated.
MichaelRed
Programmer
I don't know of any real 'shortcut' here. The actual Code can be radically simplified with a simple loop -or an even simpler recursive routine, using the substution you note (increase the payment on each 'pass'. Another issue I see here, is the (VERY DISTINCT) possability that the payment will exceed the outstanding principal before the end of the payment series, so a final payment will occur before the term.
The actual (math) calculation is actual not all that difficult, though you deffinitly will need to (seperatly) track the ammount applied to intrerest and principal on a PER PAYMENT basis. which comes back to the issue of the business rule in use for that determiniation - e.g. the previous questions re calculation and application of the payment to interest and principal. In the 'real world', there may also be other 'fees' and 'accounts' which are serviced from the payment, and these also need to be considered (deducted) from the actual (e.g. CHECK) amount of payment.
MichaelRed
m.red@att.net
There is never time to do it right but there is always time to do it over
The actual (math) calculation is actual not all that difficult, though you deffinitly will need to (seperatly) track the ammount applied to intrerest and principal on a PER PAYMENT basis. which comes back to the issue of the business rule in use for that determiniation - e.g. the previous questions re calculation and application of the payment to interest and principal. In the 'real world', there may also be other 'fees' and 'accounts' which are serviced from the payment, and these also need to be considered (deducted) from the actual (e.g. CHECK) amount of payment.
MichaelRed
m.red@att.net
There is never time to do it right but there is always time to do it over
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