May 5th, 2014, 11:56 AM  #11  
Math Team Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 14,415 Thanks: 1025  Quote:
the montly factor by which the outstanding balance is multiplied to get the month's interest is .05/12 = .00416666..... The resulting effective annual interest rate = (1 + .05/12)^12  1 = .051162... or ~5.1162% Here's how it works (Bank statement format): Code: MONTH INTEREST BALANCE 0 10,000.00 1 41.67 10,041.67 2 41.84 10,083.51 ... 11 43.44 10,468.01 12 43.61 10,511.62 : 5.1162% is PAID each month along with an extra 300. The 1st payment is 1250 + 300 = 1550 The 1000th payment is 1.25 + 300 = 301.25  
May 5th, 2014, 11:32 PM  #12 
Senior Member Joined: Apr 2014 From: UK Posts: 919 Thanks: 331 
I clearly wasn't thinking straight, the calculator I used worked on a constant payment amount. I think I agree with Denis, the monthly rate is 0.05/12, that seems to be how the banks work it, the scumbags, lol. 
May 6th, 2014, 06:08 AM  #13 
Math Team Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 14,415 Thanks: 1025 
It's easy enough to "see"; 300 to principal HAS TO mean a payment that exceeds the month's interest by 300: Code: MONTH PAYMENT INTEREST BALANCE 0 300,000.00 1 1,550.00 1,250.00 299,700.00 2 1,548.75 1,248.75 299,400.00 3 1,547.50 1,247.50 299,100.00 The whole thing is really silly...and has nothing to do with usual financial formulas... 

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