[newbie] financial accounting (2)

  • Thread starter Thread starter Jon
  • Start date Start date
J

Jon

I'm trying to calculate a formula as follows:

Effective interest rate =
principal amount / (principal amount - interest paid upfront - loan charges)
- 1

I have updated this as:

=(D60/(D60-D62+D63)) -1

Where:
D60 = Principal amount, say €100,000.00
D62 = interest paid upfront , say 10% of the principal amount, €10,000.00
D63 = loan charges, say €2000.00

I am getting a result of 8.7%, whilst when working it out with a calculator
it comes out to around 14% (13.64%).

Any ideas where my mistake is?


MS Excel 2007
 
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