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Financial Calculator

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This calculator is offered as a educational tool to help illustrate the basic concepts of reusable software components and Time Value of Money. It should not be used for financial decisions or in any situation that might result in a financial loss.

Mortgage Example

You are offered a $105,000 mortgage at an annual interest rate of 7.3% compounded monthly.  How much must you pay each month to completely repay the loan in 30 years?
  1. Enter 105000 into the present value field (the first field just to the right of the Present Value button). The calculator uses a cash-flow model where amounts you receive are entered as positive values and amounts you pay out are entered as negative values. Since you will receive this amount, it is a positive value.
  2. Enter 0 into the future value field (the second field just to the right of the Future Value button). You will repay the loan in 30 years; therefore the future value of the loan at the end of 30 years is 0.
  3. Enter 360 (30 years times 12 payments per year) into the Periods field.
  4. Enter 7.3 into the Rate field.   Note that rate is entered as a percent rather than a decimal (.073). Depending on the language and country settings of your browser, you may need to use a different decimal separator. Click the Options button to see an example of the number format expected.
  5. Click the Options button and confirm that Payments Per year and Compounding Per Year are set to the default values of 12.
     The Pay at end of period checkbox should be checked since your payments are due at the end of each month.
  6. Click the Payment button to calculate the monthly payments (which should be -719.85). Notice that the payment is a negative value since it is money paid out.

What if?

  • How will a change in interest rates effect my payments?  Enter 7.0 into the Rate field and click the Payment button again to see how a lower interest rate changes your monthly payment.
  • What is the largest loan that I can afford?   Enter the amount that you can pay toward principal and interest each month into the payment field (remember the minus sign!). To determine this amount, take the total amount that you can comfortably afford for housing each month and subtract estimated monthly payments for taxes, insurance, maintenance, etc. from it.  Click the present value button to see the maximum loan amount you can afford.
  • What lump-sum payment will I have to make to repay the loan early? Click the Create Amortization Schedule button at the bottom of the display area. Scroll down to payment 120 (10 years x 12 payments per year) and find the loan balance.

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