Finance in Prime: odd period...

[Terje Vallestad]

(05-21-2015 10:40 AM)salvomic Wrote:  hi all,
I need a hint to calc "odd period" for TVM in the Prime.
(Odd period: period between the date interest begins accruing and the beginning of the first payment period, calculated generally with simple interest, but also sometime with compound...)

An example (from the HP 12C Guide):
***
«A 36-month loan for $4,500 accrues interest at a 5% annual percentage rate (APR), with the payments made at the end of each month. If interest begins accruing on this loan on February 15, 2004 (so that the first period begins on March 1, 2004), calculate the monthly payment, with the odd days counted on the basis of a 30-day month and compound interest used for the odd period.»
***
DDAYS(2004.0215, 2004.0301) = 15 (16 in a base of 30 days, "financial year"), so 36 months + 16 days to add (at beginning of the first payment) is 36.53

If I put simply 36.53 as n, I%=5, PV=-4500, FV=0, I get PMT = -133.06 (end)
The result in the 12C is pmt = -135.17...
So, TVM as is, is not the solution...

Thank you

Salvo

Salvo,

I do not think you are making 36.53 month's payments, but are borrowing the monies for that duration. So at the start of the 36 month period you need to add the accrued interest for 16 days which is 4500x0.05/12*16/30 -> 10

So using N=36, PV=-4510 and I=5% you arrive at PMT= 135.17

Cheers, Terje