blsbball wrote:Thanks that makes definitely sense. However calculating equations that intense is by no means my strength. Is there a way to go break it up year to year?
Yes of course this can be broken down year by year. But keep the formula handy to calculate for a huge number of years.
Compunded annually = A*(1+r/100)^n, where A is the initila loan amount, r is the interest rate, n is the number of years.
Thus 1200 * (1+10/100)^3 = 1597.2
First year:
Loan amount = 1200, Interest amount = 10% of 1200 = 120.
End of the year the total loan to be paid = 1200 + 120 = 1320 (Because compounded annually)
Second year:
Loan amount = 1320, Interest amount = 10% of 1320= 132.
End of the year the total loan to be paid = 1320 + 132= 1452 (Because compounded annually)
Third year:
Loan amount = 1452, Interest amount = 10% of 1452 = 145.2.
End of the year the total loan to be paid = 1452 + 145.2 =
1597.2 (Because compounded annually)
