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Figuring Loan Calculations
Figure 5-3:
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Figuring Loan Calculations
Loans are part of almost everyone’s life. At the personal level, you may need
to deal with car loans, education loans, and a home mortgage. From a
business perspective, companies from the smallest to the largest often use loans
to fund new equipment, expansion, and so on. No matter what kind of loan
you need, Excel has the tools that permit you to evaluate loans and calculate
specific details.
Most loans have the following five factors:
Loan principal: The amount you’re borrowing. For example if you’re
interested in a loan for $5,000, then the loan principal is $5,000.
Interest rate: The cost to borrow the principal. This is how lenders
make money. The interest rate is a fee, so to speak, that a borrower pays
to a lender. Usually, but not always, the interest rate is expressed as a
percent per year.
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