yankigirli17
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- Oct 24, 2005
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Im doing a project on Excel and i need to figure out how to change APR (yearly) to monthly percents... do i just divide by 12??? the APR is 2.4% and 7.75%... what do i do?
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APR
- Thread starter yankigirli17
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G
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What does APR stand for again?
yankigirli17
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- Oct 24, 2005
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annual percentage rate... i think :roll:
G
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then just divide by 12 as you thought.
yankigirli17
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r u sure? that just seems too easy...
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Had to think and you are right - it can't be this easy as the APR includes a one of set up fee that is included in the calculation.
"P = (A-F)*r/[1 - (1+r)-N]
Now that we have the payment equation we can figure out what the APR is. First the equation is solved for "P" given the actual rate, "r" and with "F" set to zero. This is the actual payment amount that will be made over the life of the loan. To get the APR the loan amount, "A", is reduced by an amount, "F", that reflects certain up-front fees paid when the loan begins. The payment amount, "P", remains the same, but we must find a new "r" (the APR) that satisfies the equation. This can be done by an iterative equation solver. In the Excel spreadsheet the equation for APR is entered as RATE(N,-P,A-F)*12 where "N" is in months and "F" is the sum of all the up-front fees. " http://members.aol.com/stevef88/discuss/apr.htm
Sorry it is so long
"P = (A-F)*r/[1 - (1+r)-N]
Now that we have the payment equation we can figure out what the APR is. First the equation is solved for "P" given the actual rate, "r" and with "F" set to zero. This is the actual payment amount that will be made over the life of the loan. To get the APR the loan amount, "A", is reduced by an amount, "F", that reflects certain up-front fees paid when the loan begins. The payment amount, "P", remains the same, but we must find a new "r" (the APR) that satisfies the equation. This can be done by an iterative equation solver. In the Excel spreadsheet the equation for APR is entered as RATE(N,-P,A-F)*12 where "N" is in months and "F" is the sum of all the up-front fees. " http://members.aol.com/stevef88/discuss/apr.htm
Sorry it is so long
G
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Guest
Now I have checked the APR within excel and you do not need to do anything more then divide by 12 if you wish to convert from annual to monthly rates. Just make sure that your investment periods line up with your interest rate periods(same cycle time).
Where the confusion can come in is how this is applied in the real world as different standards exist across the world in how and what costs/fees get built in.
Where the confusion can come in is how this is applied in the real world as different standards exist across the world in how and what costs/fees get built in.