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?
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1 Answer
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.
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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. Nov 17, 2012 at 0:22
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@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. Nov 21, 2012 at 3:55
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@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. Nov 21, 2012 at 15:35