I am trying to find an algorithm to solve this amortization schedule:
- P = 1000, term = 12 months, Interest=5%, calculation based on actual/365.
- 10% of the total interest of the loan is added to the 4th payment(in addition to regular payment).
- All payment amounts except the 4th payment must be same amounts.
- The principal must be paid down to 0 at the end of the 12th payment
The challenge is that the extra amount at 4th payment will reduce principal and it will in turn reduce the interest. I am looking for an analytical solution if possible. If not then an iterative algorithm.
more information from the comments:
Loan begins and the first payment is on 23-Oct-2023. 4th Payment is on 23-Jan-2024. 10% interest is added to 4th payment thus reducing the principal. The effective interest rate does not change. I have come up with an iterative algorithm to solve this problem so far.