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Interest calculation...

Posted on 2016-10-30
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Last Modified: 2016-11-05
Sheet 1 of the attached Excel file has 6 columns.
payments
- The formula used for column E ("Interest todate") is: =(owed amount*interest rate)*(number of months)/12
Q1: How can I change it to calculate in daily basis?

- Item 3 ($500) paid on 10/1/2016 produces balance of $1,910.83
Q2: How to prepare this sheet upon future payments (say $600 on 11/1/2016, the balance amount to show up automatically.

Basically, columns E and F need to be automatically updated when a new entry in Columns C or D is made. These columns will not be updated for the same date.

Thank you
Payment_a.xlsx
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Question by:Mike Eghtebas
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by:contactkarthi
contactkarthi earned 150 total points
ID: 41866111
in c6 did he borrow additional $1100 or is it the old amount?

have automated the last column.. see the attached file
Payment_a.xlsx
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by:Mike Eghtebas
ID: 41866172
contactkarthi,

Thank you for the reply. To answer your question, it is new amount.

I am downloading your file now to check it out.

Mike
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C. Blaise Mitsutama earned 350 total points
ID: 41866402
Mike,

It's difficult to calculate the interest by date if you combine the individual loans because they have different start dates. One possible way of doing that would be to calculate the interest for the first loan through 12/1/2015 and add that interest and the new loan amount to the original loan. But that involves calculating interest on interest (for the period between 11/2015 and 12/2015) and I'm not sure that's right.

In the attached Excel file, I have calculated the individual $1,100 loans separately and have applied the $500 payment to the oldest loan (11/1/2015). Since the loan payment was made on 10/1, I calculated interest to that date rather than 11/1 as shown in your original worksheet.

I also created separate columns to calculate interest-to-date and paid-to-date amounts. I did this because interest-to-date is added to the running balance and paid-to-date amounts are subtracted from the running balance. I also think this makes the table easier to read.

To calculate the interest-to-date, I used the balance from column F multiplied by the interest rate (10%) and divided that by 365 to get the daily rate. I then multiplied the daily rate by the number of days between the date the interest amount was calculated and the previous date.

=IFERROR(((F6*$C$1)/365)*DATEDIF(B6,B7,"d"),"")

The running balance in column F is calculated automatically and includes the interest-to-date, paid-to-date, and the previous balance.

=IFERROR(F6+D7-E7,"")

When a payment has been made, the calculated interest is based on the reduced total. So, for example, after the payment of $500 on the first loan amount, the interest is based on the balance of $706.96. For the period from 10/1-10/30, the accrued interest is $5.57.

The amounts in my worksheet and your original calculations differ partly because your calculations are by month and mine are by day.

I also added a formula to combine the total remaining balances in cell C3 by adding the last amounts in the running balance columns F and M. This formula automatically identifies the last cell containing data in columns F and M (F6-F15 and M6-M15) and sums the amounts.

=(LOOKUP(2,1/(F6:F15<>""),F6:F15))+LOOKUP(2,1/(M6:M15<>""),M6:M15)

Payment_a.xlsx
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by:Mike Eghtebas
ID: 41875876
Thank you.
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