Interest Calculation

sammyd22
sammyd22 Registered Posts: 207 ๐ŸŽ† ๐Ÿ˜ ๐ŸŽ†
Does anybody know the formula for calculating apr into a montly rate?

Cant seem to find this in any of my books.

Cheers.

For example: APR of 18% broken into a monthly rate?

Comments

  • PGM
    PGM Registered Posts: 1,954
    divide it by 12
  • sammyd22
    sammyd22 Registered Posts: 207 ๐ŸŽ† ๐Ÿ˜ ๐ŸŽ†
    lol. I wish.

    Maybe i didnt explain it too well.

    Its calculating the annual to compund monthly rate.

    I have an annual rate of 18%

    Monthly compound rate = 1.3888 (Not quite sure how i get to this anser though)?

    Any idea on the calculation?
  • crispy
    crispy Registered Posts: 465 Dedicated contributor ๐ŸŒŸ ๐Ÿต ๐ŸŒŸ
    Hello,

    To calculate monthly:

    12th root of 1.18 = 1.013888

    1.013888 - 1 = 0.013888

    = 1.3888 %
  • sammyd22
    sammyd22 Registered Posts: 207 ๐ŸŽ† ๐Ÿ˜ ๐ŸŽ†
    Great stuff.
  • crispy
    crispy Registered Posts: 465 Dedicated contributor ๐ŸŒŸ ๐Ÿต ๐ŸŒŸ
    Hi,

    This is probably obvious but you can check the calcultation the other way around eg.

    1.01388^12 - 1 = 18 %
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ๐ŸŽ† ๐Ÿ˜ ๐ŸŽ†
    Please could any of the respondents who understand this stuff have a look at my similar query here?

    http://forums.aat.org.uk/showthread.php?t=30548


    Thank you! :)
  • PGM
    PGM Registered Posts: 1,954
    Its calculating the annual to compund monthly rate.


    Ah right its the compounding you needed to work out then.
  • sammyd22
    sammyd22 Registered Posts: 207 ๐ŸŽ† ๐Ÿ˜ ๐ŸŽ†
    thanks all
Privacy Policy