I'm starting to question the Payment amount generated by the software my lender is using, but it could be my calculations that are wrong. I would like confirmation before I proceed. Is my approach (math below) correct, or is the software (linked images) correct?
(Updated Images) http://snag.gy/3w54B.jpg http://snag.gy/ncAki.jpg
The Periodic Payment Amount the software calculates is $1,412.4.
Parameter Values:
Principal: $100,000
Interest Rate: 8.5%
Periods: 120
Payment Frequency: Monthly
Disbursal Date: January 1st 2014
Initial Payment Date: January 1st 2015
Compounding Semi-Anually
With the given values I think it's deferred for 12 periods.
My calculations:
Step 1: Calculate Interest Accrued.
Effective Annual Rate = (1 + 8.5/2)^2 = 1.08680625
Rate Per Month = EAR^(1/12) = 1.0868062^(1/12) = 1.006961062
Rate for 12 months = 1.006961062^(12) = 1.08680625
Interest Accrued for 12 months = 1.0868062*100000 = $8,680.62
Step 2: Calculate Monthly Payment
Monthly Payment = (PxI)/(1-(1+I)^(-N))
N = 120 - 12 = 108 (because 12 periods was deferred)
P = $100,000 + 8680.62
I = .006961062
Monthly Payment = $1434.86
related to (Amortization Payments with a delay in initial payments)