Payments overview
How do you calculate payments in installments with compound interest?
How do you calculate payments in installments with compound interest?
There are two possible configurations for collecting installment payments with compound interest:
- Collection at the beginning of the period;
- Collection at the end of the period.
Beginning of the period
Collection at the beginning of the period is calculated as follows:
- i = Interest rate
- n = Number of installments
- PV = Present Value (total amount of the purchase without interest)
- Installment =
End of the period
Collection at the end of the period is calculated as follows:
- i = Interest rate
- n = Number of installments
- PV = Present Value (total amount of the purchase without interest)
- Cash Flow Multiplier =
- Installment =
PV x Cash Flow Multiplier
Examples
Beginning of the period
- i = 1%
- n = 12
- PV = 1000
End of the period
- i = 1%
- n = 12
- PV = 1000