Calculating The Payment Of A Personal Or Mortgage Loan; Sample Calculation Of A Personal Loan Repayment - Texas Instruments BA II Plus User Manual

Calculating the payment of a personal or mortgage loan

The process of calculating a personal or mortgage loan consists of:
Determining the known variables;
Entering the number of payment periods (P/Y) and the number of interest-calculation
periods (C/Y);
Calculating the unknown variable.

Sample calculation of a personal loan repayment

Mary wants to borrow $15,000 to purchase a new car, and she wants to repay the loan over a
five-year period. If the bank demands a nominal rate of 6% compounded on a monthly basis,
what would be the monthly repayment (end of period)?
Known variables:
- nominal rate: (6%,12)
- term of the loan: five years (60 monthly payments)
- capital borrowed: $15,000
- Number of annual payments: 12
- Number of interest-calculation periods: 12
The monthly repayment can be calculated using the following operations:
Sequence of entries
CE/C > 2ND > CLR TVM
2ND > P/Y > 12 > ENTER
CE/C > CE/C
5 > 2ND > xP/Y > N
6 > I/Y
15,000 > +/− > PV
CPT > PMT
To repay this loan over a five-year period, the monthly repayment amount would be $289.99.
Display
0 Resets the default values.
P/Y = 12 Enters a monthly payment period.
0 Exits the entry of the P/Y variable.
Enters the number of monthly payments
N = 60
over five years.
I/Y = 6 Enters the nominal interest rate.
PV = − 15,000
Enters the amount of the loan.
Calculates the amount of the monthly
PMT = 289.9920229
payments.
Explanation
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