TOC

Amortization Definition

Instructions: Familiarize yourself with the following terms. Be certain that you know the definition of each term and where it corresponds in the Amortization.

R = (Pi) / (1-(1+i)^-n)

P is the loan.

This is the total amount of money one is paying back.

R = amount of money.

This is the amount of money needed to be paid at the end of each period to get rid of the total loan.

i = the rate or r/m.

This is the interest the account earns per period.

r = the rate of interest.

This is the interest the account per year.
m = conversion periods.

This is the number of conversion periods per year.
n = m*t or conversion periods.

This is the total number of times the account earns interest.
t = years.

This is the number of years the process will go on for.
Incremental Calculator
Calculator
Intro
TOC