Finance Formula

[SscorpiusS]

Hello, guys!

I am struggling with some math formulas for a Visual FoxPro program i want to build. This is about a housing contract, made between the city hall local council and an individual.
What i want to do is calculate the credit interest rate, having a determined period of time (say 10-20 years).
Here's the formula i was thinking of, but it doesn't calculate correctly:

(c*d)/((p*(1-(1+d/p))))^(-n*p)

c=credit
d=interest rate
n=number of years
p=period(12 months)

Has anyone had a similar problem?

Thanks in advance!

PS: I'm not sure i'm on the right topic. If so, please redirect me towards an appropriate one.

 

[Mike Lewis]

First of all, this has got nothing to do with Visual FoxPro. The reason I mention that is in case anyone tells you that you should post your question in the VFP forum. In fact, it's a general business maths question, so this forum is as good as any.

Now, your formula isn't at all clear. I can see that you have an interest rate (d) and an investment period , but what exactly is "credit" and what is "period(12 months)" (in other words, what are c and p?).

OK, let's assume you have a start amount ([tt]P[sub]s[/sub][/tt]), which you invest for n years, and you end up with a final amount ([tt]P[sub]e[/sub][/tt]). You want to know the annual interest rate that you have earned over that period. Is that what you want?

If so, this is the formula:

[tt](((P[sub]e[/sub] / P[sub]s[/sub]) ^ (1/n)) - 1) * 100.0[/tt]

If that's now what you want, please clarify your question.

Mike

__________________________________
Mike Lewis (Edinburgh, Scotland)

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[SscorpiusS]

Now i realize i didn't explain correctly my problem.

The formula presented calculates the fixed monthly rate. There should be an "r=" before that. The interest rate is a procent there (it is a given number, 5% or 10%, doesn't matter). What i want to find is the interest on a total given number of years (20 years, in this case). This is an intermediate formula, to verify it on the sums that have already been paid, etc. I do not think it is completely correct, since it doesn't verify on the real numbers specified in the contract.

That total interest (in money), calculated with a certain percent each year(according to legal requirements) has to be split into monthly rates on this total period of 20 years. The question is how did they got to that sum? What formula did they use? How do i find out the percent?

I found an 80 pages document on internet on this precise matter. This is how i got to that mathematic relation.

I hope that clarifies the issue. I will provide further information, if needed.

Thanks!