Total interest paid for a load L(money) over M months at an annual interest rate ia(%)

[Cornel]

Hi,

Calculate the total interest paid:

[Werner_E]

M=240 months is wrong! M is not a time, it has to be just a number (possibly numbering the months).

In the formula for "p.mon" the definition of "m" in the exponent is missing.

[Cornel]

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@Werner_E wrote:

M=240 months is wrong! M is not a time, it has to be just a number (possibly numbering the months).

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Yes, its the numbering/number of the months for which the load was made.

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@Werner_E wrote:

In the formula for "p.mon" the definition of "m" in the exponent is missing.

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From where I took the problem its not written either there. But from my interpretation is like that:

[Werner_E]

My point was merely that the information is garbage, as is unfortunately very often the case in so-called economic “science”.
If a quantity is dimensionless, then you can't assign a unit to it in the text either.
And if you use a variable “m” in your explanations, then you also have to say what you mean by it.
Simply replacing “m” with a “k” would be too short-sighted, you would just have to express that p.mon is dependent on “m” - in mathematics this is called a function 😉
In the formula for b.k you can then use the running variable k as a function argument.

But actually its just a typo and "m" should be "M" !

See my answer below.

[Cornel]

Yes, it think its better to forget this problem. This problem I found somewhere, and it seems to me interesting at first sight as it is related to real life. Think about when someone make a mortgage/load when someone buy a house. But anyway, lets forget about this problem.

[Werner_E]

As DJF pointed out, mot programs have a built-in function for those kind of calculations.

The scan you showed is sloppily formulated and also contains a typing error (m > M)

But essentially its the correct formula (one can argue about the sign, if the result should be positive or negative).

See my answer here Solved: Re: Total interest paid for a load L(money) over M... - PTC Community

[DJF · Accepted solution]

There are of course built-in finance functions within mathcad and excel.

[Werner_E]

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@DJF wrote:

There are of course built-in finance functions within mathcad and excel.

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Yes, that corresponds with the formula given if we replace "m" by "M" 🙂