Hopefully someone can help me or point me to an article that can help. FMP has a built in function (PMT) to calculalate a Mortgage payment based on LoanAmount, InterestRate, and NumberOfPayments. However, I would like to figure out what the LoanAmount would be if the known figures were Payment, IntertRate and NumberOfPayments.

I have manually entered the formula for the PMT function as shown below. It has been so long since I had a math class I dont know where to begin to try to solve for LoanAmount. The file containing the formula is attached (FM7). Any help appreciated.

Loan = 100,000

InterestRate = 7%

LoanYears = 30

Let ( [ IntDec = InterestRate * .01;

IntPer = IntDec/12;

NoPayments = LoanYears * 12;

Payment = (Loan*(1+IntPer)^NoPayments*IntPer)/(((1+IntPer)^NoPayments) -1)

]; Payment)

Payment = $665.30

z_M.zip

Cant you just use PV() ?

Let ( [ IntDec = InterestRate * .01;

IntPer = IntDec/12;

NoPayments = LoanYears * 12

]; Round ( PV ( PaymentPerMonth ; IntPer ; NoPayments ); 2 ))

But I am curious... If you are trying to figure out a mortgage payment, dont you have to figure out the ammortization instead of a fixed number?

I am not sure what the question is. PV() is indeed the function that returns the loan principal. If you want to calculate it the long way (as you have done with payment), you can find the exact formula in the help for the PV() function.

Sorry, FMP's example threw me. Never did like word problems.

FMP Help FIle:

Your cousin borrowed $2,000 from you, offering to pay you back $500 a year for five years, for a total of $2,500 at the end of five years. If inflation was 5 percent annually, with the following entry you could find out what those payments are worth with the PV function.

PV(500;.05;5) returns 2164.73833531....

If I strip down their example to the following it reads much easier (for me at least):

Your cousin can pay you back $500 a year for five years. If you charge 5 percent interest annually how much can your cousin borrow?

PV(500;.05;5) returns 2164.73833531....