Q:

How can you calculate amortized loan payments with a formula?

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Quick Answer

The formula for calculating amortized loan payments is A=P(r(1+r)^n)/((1+r)^n-1), states Vertex42. "A" is the payment amount per period, "P" is the beginning loan principal, "r" is the interest rate per period, and "n" is the number of payment periods.

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Full Answer

To use this formula, add one to the interest rate per period, and multiply that number by itself "n" times, where "n" is the number of payment periods, according to Vertex42. Subtract one from this number to get the denominator of the formula. To calculate the numerator, multiply the previous multiplied number, without subtracting one, by the rate and then by the principal loan amount, Then divide the denominator from the numerator to get the payment amount per period.

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