r represents the interest rate per period. Because this represents an annual interest rate in this case, this number may be referred to as an APR (annual percentage rate). P represents the principal, or the amount borrowed. This can also be referred to as the present value. N represents the number of periods in the loan. In this case, periods equals years, and would just be the number of years on your loan agreement.
AnnualPayment=(0. 09($10,000))(1−(1+0. 09)−2){\displaystyle AnnualPayment={\frac {(0. 09($10,000))}{(1-(1+0. 09)^{-2})}}} Note that when inputting a percent (9% in this case), it must be input as a decimal. 9% therefore becomes . 09.
Simply input the amount, interest rate, and term into the calculator, and the amortization table will show every monthly payment from the current point to the end of the loan.
For the sake of this example, assume the new loan is the same as previously-discussed one, with the only change being you are now required to make monthly payments for the two year period.
First, the amount of periods in the loan, or “n”, would change. Instead of being 2 (representing two years before, or two annual payments), it is now 24 for monthly payments (representing 1 payment a month for 2 years) and 8 for quarterly payments (representing one payment each quarter for the two years). Second, the annual interest rate would need to change to reflect the fact there are more payments. To determine an interest rate for periodic payments, divide the annual interest rate by the number of payments required within a year. For example, a 9% annual interest rate is equivalent to a . 0075 or . 75% monthly interest rate (. 09/12). [3] X Research source
