How
to Calculate Equal Monthly Payments


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2007 
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2003 
Macros
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Macros
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Excel
2010 
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We
have learnt
how to calculate the equal
monthly
payments or instalments using the PMT function. In fact, using the
same function we
have also prepared a complete loan amortization schedule. Many
people, specially
the accountants and math oriented finance personnel, wish to understand
the background of the calculation. So we demonstrate in the video below how
tocalculate the equal
monthly payments for a loan
based on a mathematical
equation. Normally we use the Excel financial PMT function by inputting the parameters as required. Some people may find this difficult to understand. Now you can derive a mathematical equation using the loan amount, interest rate and the number of payments and the mathematical formula can be written as : EMI = (LxI) x (1+I)^N [(1+I)^N]  1 Here L is the loan amount, I is the interest rate, N is the number of payments or periods. Entering this equation in an Excel cell has to be done carefully using appropriate brackets otherwise we end up with the wrong calculation.. How the entry of the math equation is done is shown in Excel training video below: Reference 



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