Calculate payments based on APR

[John Esak]

Yeah, and imagine if you had a million $3.78's, boy then I'd want a bigger
calculator.

Like the current Obama jokes.... a trillion here, a trillion there and
pretty soon we're talking *real* money.

Now, this is funny on so many levels I can't stop laughing (or crying) long
enough to explain it to anyone who doesn't get it right away.

Kind of like the old saw "There are only 10 types of people, those who know
binary, and those who don't."  :-)

Money is only *real* when it is yours... so whether some nebulous printing
house is churning it out by the sheet, it shouldn't bother anybody.

Okay wait, the laughing or crying thing... I've made up my mind... it's
definitely crying... :-(    :-)

John



> -----Original Message-----
> From: filepro-list-bounces+john=valar.com at lists.celestial.com
> [mailto:filepro-list-bounces+john=valar.com at lists.celestial.co
> m] On Behalf Of Robert T. Repko (R Squared Consultants)
> Sent: Tuesday, April 14, 2009 12:51 PM
> To: filepro-list at lists.celestial.com
> Cc: filepro-list at lists.celestial.com
> Subject: Re: Calculate payments based on APR
>
> Believe it or not at 4/14/2009 10:11 AM, Kenneth Brody said:
> >Robert T. Repko (R Squared Consultants) wrote:
> >>Believe it or not at 4/13/2009 08:23 PM, Kenneth Brody said:
> >[... 365 daily payments vs 12 monthly payments ...]
> >>That's what I thought but when I ran it my answer was different by
> >>.315/month, 89.74 vs. 89.425
> >[...]
> >>eh = TVM_PMT(pi,ep,ez,"0") = $2.94 daily payment
> >>"2.94" * "365" / "12" = 89.425
> >>2.94 is daily payment, mult. by 365 for annual payment, divide by
> >>12 for monthly payment = 89.425.  That's a difference of ~
> >>$.315/month.  Maybe I'm wrong but I wouldn't expect that much
> >>difference between daily vs. monthly calculations, and I would
> >>expect the daily calculations to be higher than the monthly
> >>calculations not lower.
> >
> >Why would you expect to pay more if you pay it faster?  (And the
> >difference is about 1/3 of 1%.)
> >
> >Try a different angle, and you'll see this is correct.
> >
> >You agree that 12 monthly payments on $1,000 at 13.9% was 89.74
> >each, correct?  (That's what filePro and your calculator
> both came up with.)
> >
> >That's a total of $1076.88 in payments.  However, if you were to
> >make a single yearly payment, you would pay $1139.00, correct?  By
> >paying it in more payments over the same time, the total
> payment is less.
> >
> >So, making 365 daily payments of $2.94 instead of 12 monthly
> >payments of $89.74 means you pay a total of $1073.10, for a whopping
> >$3.78 savings.
> >
> >--
> >Kenneth Brody
>
> First let me say thank you for working with me on this Ken, I really
> do appreciate it and I hope I don't sound argumentative
> because I am not.
>
> The difference might be small but I didn't expect that much of a
> difference and the difference to be the opposite of what I
> expected.  I could be wrong but my concern is using this in
> production and I found out the hard way my calculations are wrong.
>
> Lending institutions calculate compound interest on a daily basis
> instead of monthly basis for one reason they make more money
> on interest.
>
> If I compound on a daily basis the interest is compounded 30 times by
> the end of the month instead of once if it compounded monthly.
>
> If I pay the 1000.00 loan off on day 1 I pay 1002.94.  If I don't
> make a payment on day 1 but pay if off on day 2 I pay 1005.88.  The
> longer I wait to pay the more I pay in interest which makes my
> payments higher.  If I pay monthly the I will pay more if the
> calculation are done on a daily basis vs monthly basis.  If I quote a
> monthly payment I expect the payments to be higher if I compound
> daily vs monthly.
>
>
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