What is the correct name for this multiplicand
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We are providing a loan for 1 year and wish to tell the customer how much they will pay us per month, taking into account that they will pay 15% up front as a deposit and make 11 monthly payments on the loan (the remaining 85%).
So we multiply the total by 0.15 to get the deposit (15%) - so £150 up front.
And then (taking account of an APR of 27.1%), to calculate the instalment amount for 11 months, we have been told to take the total price of the product that we are offering, e.g. £1,000 and multiply it by this "magic value" 0.08693, so £1,000*0.08693=£86.93.
This gives us (£86.93 * 11) + £150 = £1,106.23 total amount repayable, so £106.23 in interest over the year.
In the domain of financing loans, what is the correct name for this magic multiplicand (0.08693)? It seems to serve a few purposes all at once:
- It takes care of adding the relevant amount of interest to the loan, whilst simultaneously taking into account the fact that the customer is financing
85%of the loan - It works out how much the customer would need to pay per month given that there will be 11 payments.
I care from a mostly theoretical perspective as we have modelled this in code and I want to name the constant with an appropriate name.
terminology finance
asked Dec 4 at 20:35
David Goate
1011
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We are providing a loan for 1 year and wish to tell the customer how much they will pay us per month, taking into account that they will pay 15% up front as a deposit and make 11 monthly payments on the loan (the remaining 85%).
So we multiply the total by 0.15 to get the deposit (15%) - so £150 up front.
And then (taking account of an APR of 27.1%), to calculate the instalment amount for 11 months, we have been told to take the total price of the product that we are offering, e.g. £1,000 and multiply it by this "magic value" 0.08693, so £1,000*0.08693=£86.93.
This gives us (£86.93 * 11) + £150 = £1,106.23 total amount repayable, so £106.23 in interest over the year.
In the domain of financing loans, what is the correct name for this magic multiplicand (0.08693)? It seems to serve a few purposes all at once:
- It takes care of adding the relevant amount of interest to the loan, whilst simultaneously taking into account the fact that the customer is financing
85%of the loan - It works out how much the customer would need to pay per month given that there will be 11 payments.
I care from a mostly theoretical perspective as we have modelled this in code and I want to name the constant with an appropriate name.
terminology finance
asked Dec 4 at 20:35
David Goate
1011
Hey, what is the interest rate? $i=...?$
– callculus
Dec 4 at 20:45
Wouldn't it be10.623%? So,£1,000*0.10623=£106.23
– David Goate
Dec 4 at 20:59
Actually sorry, I think it'd be something like: £1,000 (total)-£150(deposit)=£850 loan (monthly instalment)£86.93*11 (months)=£956.23 (total repayable) £106.23 of interest on an £850 loan=12.497647058823529%
– David Goate
Dec 4 at 21:04
add a comment |
up vote
0
down vote
favorite
up vote
0
down vote
favorite
We are providing a loan for 1 year and wish to tell the customer how much they will pay us per month, taking into account that they will pay 15% up front as a deposit and make 11 monthly payments on the loan (the remaining 85%).
So we multiply the total by 0.15 to get the deposit (15%) - so £150 up front.
And then (taking account of an APR of 27.1%), to calculate the instalment amount for 11 months, we have been told to take the total price of the product that we are offering, e.g. £1,000 and multiply it by this "magic value" 0.08693, so £1,000*0.08693=£86.93.
This gives us (£86.93 * 11) + £150 = £1,106.23 total amount repayable, so £106.23 in interest over the year.
In the domain of financing loans, what is the correct name for this magic multiplicand (0.08693)? It seems to serve a few purposes all at once:
- It takes care of adding the relevant amount of interest to the loan, whilst simultaneously taking into account the fact that the customer is financing
85%of the loan - It works out how much the customer would need to pay per month given that there will be 11 payments.
I care from a mostly theoretical perspective as we have modelled this in code and I want to name the constant with an appropriate name.
terminology finance
asked Dec 4 at 20:35
David Goate
1011
We are providing a loan for 1 year and wish to tell the customer how much they will pay us per month, taking into account that they will pay 15% up front as a deposit and make 11 monthly payments on the loan (the remaining 85%).
So we multiply the total by 0.15 to get the deposit (15%) - so £150 up front.
And then (taking account of an APR of 27.1%), to calculate the instalment amount for 11 months, we have been told to take the total price of the product that we are offering, e.g. £1,000 and multiply it by this "magic value" 0.08693, so £1,000*0.08693=£86.93.
This gives us (£86.93 * 11) + £150 = £1,106.23 total amount repayable, so £106.23 in interest over the year.
In the domain of financing loans, what is the correct name for this magic multiplicand (0.08693)? It seems to serve a few purposes all at once:
- It takes care of adding the relevant amount of interest to the loan, whilst simultaneously taking into account the fact that the customer is financing
85%of the loan - It works out how much the customer would need to pay per month given that there will be 11 payments.
I care from a mostly theoretical perspective as we have modelled this in code and I want to name the constant with an appropriate name.
terminology finance
terminology finance
asked Dec 4 at 20:35
David Goate
1011
asked Dec 4 at 20:35
David Goate
1011
edited Dec 4 at 20:37
asked Dec 4 at 20:35
David Goate
1011
asked Dec 4 at 20:35
David Goate
1011
asked Dec 4 at 20:35
David Goate
1011
1011
Hey, what is the interest rate? $i=...?$
– callculus
Dec 4 at 20:45
Wouldn't it be10.623%? So,£1,000*0.10623=£106.23
– David Goate
Dec 4 at 20:59
Actually sorry, I think it'd be something like: £1,000 (total)-£150(deposit)=£850 loan (monthly instalment)£86.93*11 (months)=£956.23 (total repayable) £106.23 of interest on an £850 loan=12.497647058823529%
– David Goate
Dec 4 at 21:04
add a comment |
Hey, what is the interest rate? $i=...?$
– callculus
Dec 4 at 20:45
Wouldn't it be10.623%? So,£1,000*0.10623=£106.23
– David Goate
Dec 4 at 20:59
Actually sorry, I think it'd be something like: £1,000 (total)-£150(deposit)=£850 loan (monthly instalment)£86.93*11 (months)=£956.23 (total repayable) £106.23 of interest on an £850 loan=12.497647058823529%
– David Goate
Dec 4 at 21:04
Hey, what is the interest rate? $i=...?$
– callculus
Dec 4 at 20:45
Hey, what is the interest rate? $i=...?$
– callculus
Dec 4 at 20:45
Wouldn't it be
10.623%? So, £1,000*0.10623=£106.23– David Goate
Dec 4 at 20:59
Wouldn't it be
10.623%? So, £1,000*0.10623=£106.23– David Goate
Dec 4 at 20:59
Actually sorry, I think it'd be something like: £1,000 (total)-£150(deposit)=£850 loan (monthly instalment)£86.93*11 (months)=£956.23 (total repayable) £106.23 of interest on an £850 loan=12.497647058823529%
– David Goate
Dec 4 at 21:04
Actually sorry, I think it'd be something like: £1,000 (total)-£150(deposit)=£850 loan (monthly instalment)£86.93*11 (months)=£956.23 (total repayable) £106.23 of interest on an £850 loan=12.497647058823529%
– David Goate
Dec 4 at 21:04
add a comment |
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Hey, what is the interest rate? $i=...?$
– callculus
Dec 4 at 20:45
Wouldn't it be
10.623%? So,£1,000*0.10623=£106.23– David Goate
Dec 4 at 20:59
Actually sorry, I think it'd be something like: £1,000 (total)-£150(deposit)=£850 loan (monthly instalment)£86.93*11 (months)=£956.23 (total repayable) £106.23 of interest on an £850 loan=12.497647058823529%
– David Goate
Dec 4 at 21:04