Parameters


1. Loan Amount









The total amout that a
borrower borrows.
















2. Interest Rate/Annual Percentage Rate(APR)







The annual interest rate
applicable to the loan quoted by the lender of the fund.



Interest rates may be
quoted on annual, semiannual, quarterly and monthly basis.












3. Maturity










The tenure for which the
loan is taken. Maturity is often quoted in years and months.











Case


A man wants to purchase a new car costing $15000. He
wants to fund his purchase from a


local bank who quotes an interest rate of 9%.
Furthermore, the interest has to be paid


twice every year (semiannual compounding) for a
period of 10 years and 6 months.












The EMI payments for this loan is calculated as
follows


a.
Input loan amount (i.e $15000) in the loan amount input cell of the
calculator. Change


currency from the drop down list.


b.
Input 9 in the interest rate input cell corresponding to the interest rate
charged by the


bank. Change the compounding method from the drop
down list


c.
Input 10 in the years input cell and 6 in the months input cell.


d.
Notice that the equivalent periodic interest rate and number of payment
periods are


automatically calculated.


e. The
EMI for the loan application is also calculated automatically on the basis of
the


information generated in (d).











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