Loan Interest Payment Puzzle / Question

[Pat Mustard]

Ok the half and half

Small

Code:

Principle Interest Lump payment balance
2,000.00 1.05 2,100.00 1,000.00 1,100.00
1,100.00 1.05 1,155.00 1,000.00 155.00
155.00 1.05 162.75 1,000.00 -837.25

Big

Code:

Principle Interest Lump payment balance
20,000.00 1.03 20,600.00 1,000.00 19,600.00
19,600.00 1.03 20,188.00 1,000.00 19,188.00
19,188.00 1.03 19,763.64 1,837.25 17,926.39
17,926.39 1.03 18,464.18 2,000.00 16,464.18
16,464.18 1.03 16,958.11 2,000.00 14,958.11
14,958.11 1.03 15,406.85 2,000.00 13,406.85
13,406.85 1.03 13,809.06 2,000.00 11,809.06
11,809.06 1.03 12,163.33 2,000.00 10,163.33
10,163.33 1.03 10,468.23 2,000.00 8,468.23
8,468.23 1.03 8,722.27 2,000.00 6,722.27
6,722.27 1.03 6,923.94 2,000.00 4,923.94
4,923.94 1.03 5,071.66 2,000.00 3,071.66
3,071.66 1.03 3,163.81 2,000.00 1,163.81
1,163.81 2.03 2,362.54 2,001.00 361.54
361.54 3.03 1,095.45 2,002.00 -906.55

Ok that's 15 monthly payments of $2,000 each and one final payment of $1,093.45 giving a total payment of $31,093.45 (if my ready reckoning is best). So half and half is better than my previous two scenarios.

Here's a link to the excel sheet with the formulae marked out for you. The small loan is the first sheet and the big loan the second. You can tweak the numbers how you want, and I've assumed the compounding is monthly rather than daily (most banks compound their interest daily, but it's a bitch to work down to the multiplying factor, and the numbers won't be more than a few pennies off at most).

Hope this helps.