Is there a formula to find the monthly interest rate required on a compounded interest fixed-rate mortgage loan, given the principal, the monthly payment, and the loan's term?
The formula cannot be explicitly solved for the interest rate. However, you can calculate the interest rate using formulas built into spreadsheets like Excel, calculators like the TI-83, any financial calculator, and using on-line calculators.
-
To add a thought, if there's no equation, how does excel solve this? It guesses. And then increases or decreases the rate until the error is less than some tiny amount. – JTP - Apologise to Monica♦ Nov 17 '12 at 0:22
-
@JoeTaxpayer That's basically what I found out. I wrote a script that tested interest rates until it found one that fit the givens. I'd select yours as the answer, but I can't. – unitron6991 Nov 21 '12 at 3:55
-
@unitron6991 - Barry's answer is fine, I only wanted to clarify. The important thing is that you see and understand the solution, which is pretty cool. – JTP - Apologise to Monica♦ Nov 21 '12 at 15:35
