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  • Types of Loans: Annuity Loan

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    Evelyne Bujorean
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    The document describes three types of loans: 1) Annuity loans have constant payments each period where the interest portion decreases over time as the principal gets smaller. This causes repayments to increase over time. 2) Serial loans have decreasing payments each period where interest decreases as principal gets smaller, leading to constant repayments. 3) Interest-only loans allow periods with no repayments where only interest is paid, keeping the principal constant during these periods.

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    Оригинальное название

    Types of Loans

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    The document describes three types of loans: 1) Annuity loans have constant payments each period where the interest portion decreases over time as the principal gets smaller. This causes repayments to increase over time. 2) Serial loans have decreasing payments each period where interest decreases as principal gets smaller, leading to constant repayments. 3) Interest-only loans allow periods with no repayments where only interest is paid, keeping the principal constant during these periods.

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    © All Rights Reserved
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    Отметить как неприемлемый контент
    50 просмотров2 страницы

    Types of Loans: Annuity Loan

    Загружено:

    Evelyne Bujorean
    The document describes three types of loans: 1) Annuity loans have constant payments each period where the interest portion decreases over time as the principal gets smaller. This causes repayments to increase over time. 2) Serial loans have decreasing payments each period where interest decreases as principal gets smaller, leading to constant repayments. 3) Interest-only loans allow periods with no repayments where only interest is paid, keeping the principal constant during these periods.

    Авторское право:

    © All Rights Reserved
    Скачайте в формате PDF, TXT или читайте онлайн в Scribd
    Отметить как неприемлемый контент
    из 2

    Types of loans

    Annuity loan
    The payment for each period is constant. The interest part decrease during time. This is because the
    principal get smaller and smaller. Because of this the repayment increase during time.

    Payment

    Repayment

    Interest
    Period
    1 2

    Serial loan
    The payment for each period decreasing. The interest part decrease during time. This is because the
    principal get smaller and smaller. The repayment is constant.

    Payment

    Interest

    Repayment
    Period
    1 2

    Interest-only loan
    Here it is possible to have periods with no repayment and where only interests are paid. In those periods the principal is
    constant.

    Payment

    Repayment Repayment

    Interest Interest
    Interest Interest
    Period
    1 2

    1
    Nicolai Green Hansen 6. december 2011
    Formulas

    Projection

    Cn: Capital after ´n´ periods


    C 0: Start capital
    i: Interest
    n: Number of periods

    Backwards projection

    C 0: Start capital
    Cn: Capital after ´n´ periods
    i: Interest
    n: Number of periods

    Effective interest

    ie: Effective interest


    i: Interest
    n: Number of periods

    Annuity loan

    Saving formula
    An: Future value after ´n´ periods
    Pa: Payment per period
    n: Number of periods
    i: Interest

    Dept formula

    A0: Start dept


    Pa: Payment per period
    n: Number of periods
    i: Interest

    Annuity payment

    Pa: Payment per period


    A0: Start dept
    n: Number of periods
    i: Interest

    2
    Nicolai Green Hansen 6. december 2011

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