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| Parameters |
| | 1. Loan Amount | | | | | | |
| | | The total amout that a borrower borrows. | | | | |
| | | | | | | | | | |
| | 2. Interest Rate/Annual Percentage Rate(APR) | | | | |
| | | The annual interest rate applicable to the loan quoted by the lender of the fund. |
| | | Interest rates may be quoted on annual, semiannual, quarterly and monthly basis. |
| | | | | | | | | | |
| | 3. Maturity | | | | | | | |
| | | The tenure for which the loan is taken. Maturity is often quoted in years and months. |
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| Case |
| | A man wants to purchase a new car costing $15000. He wants to fund his purchase from a |
| | local bank who quotes an interest rate of 9%. Furthermore, the interest has to be paid |
| | twice every year (semiannual compounding) for a period of 10 years and 6 months. |
| | | | | | | | | | |
| | The EMI payments for this loan is calculated as follows |
| | a. Input loan amount (i.e $15000) in the loan amount input cell of the calculator. Change |
| | currency from the drop down list. |
| | b. Input 9 in the interest rate input cell corresponding to the interest rate charged by the |
| | bank. Change the compounding method from the drop down list |
| | c. Input 10 in the years input cell and 6 in the months input cell. |
| | d. Notice that the equivalent periodic interest rate and number of payment periods are |
| | automatically calculated. |
| | e. The EMI for the loan application is also calculated automatically on the basis of the |
| | information generated in (d). |
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