See above. A 30yr mtg with interest rate X% paid off in 15 yrs will be equivalent to having taken out a 30 year loan on the same date at lower than X% and very close to the rate of what a 15-yr loan would have been on that same date. Difference is so marginal as to not merit consideration, but provides much risk avoidance. Do I care that I paid 3.875% for 15 ...
You are ALL missing the point. He is looking for the "equivalent"rate AFTER paying off the loan early. That is, on a 30 year loan at x% taken to term, I paid x%. That is not debatable. If I pay off the loan in 20 years, it is the "equivalent" of having taken out the loan ORIGINALLY at a much lower rate of .8x% or what have you. If I ...
Starting with the formula for the present value of an ordinary annuity:
the rearrangement is straightforward. Unfortunately, this site does not welcome the input of mathematical formulas, so by verbal description
Divide both sides by C
Multiply both sides by i
Subtract 1 from both sides
Change the sign of both sides
Take logarithms of both sides
In excel use the nper() formula:
Returns the number of periods for an investment based on periodic,
constant payments and a constant interest rate. Syntax
For a more complete description of the arguments in NPER and for more
information about annuity functions, see PV.
The NPER function syntax has the following ...