(10C) Mortgage Loan Interest Rate

[Dieter]

(11-01-2018 02:39 PM)Albert Chan Wrote:  The formulas were meant for rough estimation, using "normal" calculators (no X^Y)

Who does a mortgage calculation, let alone determine the effective interest rate, with such a calculator?

But anyway, if I understand this correctly you simply determine an estimate for the interest rate. The exact result then is determined by (repeated) interpolation, e.g. with the secant method:

(11-01-2018 02:39 PM)Albert Chan Wrote:  To get more accurate interest rate, do interpolation (but X^Y is required):
i1 = 0.013408, C1 = n*i1 / (1 - (1+i1)^-n) = 1.267246
i2 = 0.012497, C2 = n*i2 / (1 - (1+i2)^-n) = 1.247888
Interpolate for C = nR/P = 1.248048, we get i = 0.0125045

But you don't know how accurate this is unless you do some more iterations. ;-)

Re. the HP method from the posted manual page: I remember this has been discussed before, and for this special case it seems to be a quite good estimate.

Dieter