Tabular Example

To find the effective monthly interest rate on a loan that will be paid off in 5 months. The loan was for $100 with an interest rate of 2% per month compounded daily.

(1)
\begin{align} EIR=\left[1+\left(\frac{0.02}{30}\right)\right]^{30}-1 = 0.02019454 \end{align}

Now use the EIR to calculate the monthly payment.

(2)
\begin{eqnarray} \text{Payment Amount} & = & 100 \cdot \left(\frac{0.02019454 \cdot (1+0.02019454)^5}{(1+0.02019454)^5-1}\right)\\ & = & \$21.2278 \end{eqnarray}
This table contains the computed values:
Payment Number Payment Amount Interest Principal Payment Balance Remaining
1 $21.2278 $2.01945 $19.20837 $80.792
2 $21.2278 $1.63155 $19.59627 $61.195
3 $21.2278 $1.23581 $19.99200 $41.203
4 $21.2278 $0.83208 $20.39570 $20.876
5 $21.2278 $0.42020 $20.80762 $0.0000
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