0

I have calculated equated installments for credits using the following formula: Equated installments = (Interest * initial amount payment) / (1 - (1 + interest)^-number of periods)

However, with the above formula I do not get the desired result to get equated installments with Value Added Tax calculated over the interests paid on every installment.

I tried to use the aforementioned formula to calculate the equated installment with Value Added Tax in the following fashion: To the annual interest rate I added a 16% (which is the Mexican Value Added Tax) to get the final interest that I should use in the formula. For example, if the annual interest was of 43%, the interest that I used in the formula was of 49.88% as 0.43 * 1.16 = 0.4988. Also, a financial year is used (360 days in a year), the number of periods is 12, and the initial balance is of 100000.

However, I did not get the expected result after replacing all the values in the formula to the get equated installment.I got 10399.21 as the equated payment and the expected result is 10804.12. I have added a link here to a spreadsheet with the example I am talking about to explain myself better. Thank you very much for your help

Amadeus Sanchez
  • 101
  • On one hand the financial year is used. On the other hand the amount of the days for each month is not always 30. This doesn´t really fit. I would suggest to take 30 (financial) days for each month. – callculus42 Nov 09 '15 at 19:19
  • @calculus. I know right? However, that's the way a client calculates equated installments for a credit. – Amadeus Sanchez Nov 09 '15 at 19:25
  • If you let it this way, then you cannot get a simple formula. In this case it is a good idea to calculate the installments by using the excel solver. – callculus42 Nov 09 '15 at 19:36
  • @calculus Sure, I will try that. However, I have the gut feeling that there might be a way to solve it by using numerical methods. Would you please point me in the right direction? Thank you! – Amadeus Sanchez Nov 09 '15 at 19:40

0 Answers0