8/7/2019 Assignment on Effective Int Re Rest Rate

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S.K. PATEL INSTITUTE OFMANAGEMENT AND COMPUTER

STUDIES

Assignment On Calculation of EFFECTIVE INTEREST RATE

Submitted To:

Prof. Sandhya

Submitted By:

Gurjar pankaj k (34)

Modi Dhara J (59)

Kharpate Swapnil S (47)

Jadav Akshay (38)

8/7/2019 Assignment on Effective Int Re Rest Rate

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Date: 18-12-2008 For the purpose of knowing interest rate on a car loan we visited Maruti Suzukis

dealer Popular wheeler pvt.ltd. Which is situated at Narol, Ahmedabad.fromthere we get information about the payment criteria for purchasing car on loan.

We have to find out the different installments for 3 years, 5 years and 7 yearsand the difference rate of interest for it. When we asked about it they have give usthe following details.

ICICI BANK

Loan of Rs.200000, Loan Period-3 Years, Installment-Monthly, Interest Rate-12%

LOAN PERIOD-3 YEARS

Year BeginningAmount

MonthlyInstallment Interest

PrincipalRepayment

RemainingBalance

1 200000.00 6643 2000.00 4643.00 195357.002 195357.00 6643 1953.57 4689.43 190667.573 190667.57 6643 1906.68 4736.32 185931.254 185931.25 6643 1859.31 4783.69 181147.565 181147.56 6643 1811.48 4831.52 176316.036 176316.03 6643 1763.16 4879.84 171436.19

7 171436.19 6643 1714.36 4928.64 166507.568 166507.56 6643 1665.08 4977.92 161529.639 161529.63 6643 1615.30 5027.70 156501.93

10 156501.93 6643 1565.02 5077.98 151423.9511 151423.95 6643 1514.24 5128.76 146295.1912 146295.19 6643 1462.95 5180.05 141115.1413 141115.14 6643 1411.15 5231.85 135883.2914 135883.29 6643 1358.83 5284.17 130599.1215 130599.12 6643 1305.99 5337.01 125262.1116 125262.11 6643 1252.62 5390.38 119871.7417 119871.74 6643 1198.72 5444.28 114427.4518 114427.45 6643 1144.27 5498.73 108928.7319 108928.73 6643 1089.29 5553.71 103375.0120 103375.01 6643 1033.75 5609.25 97765.7621 97765.76 6643 977.66 5665.34 92100.4222 92100.42 6643 921.00 5722.00 86378.4323 86378.43 6643 863.78 5779.22 80599.21

8/7/2019 Assignment on Effective Int Re Rest Rate

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24 80599.21 6643 805.99 5837.01 74762.2025 74762.20 6643 747.62 5895.38 68866.8226 68866.82 6643 688.67 5954.33 62912.4927 62912.49 6643 629.12 6013.88 56898.6228 56898.62 6643 568.99 6074.01 50824.6029 50824.60 6643 508.25 6134.75 44689.8530 44689.85 6643 446.90 6196.10 38493.7531 38493.75 6643 384.94 6258.06 32235.6932 32235.69 6643 322.36 6320.64 25915.0433 25915.04 6643 259.15 6383.85 19531.1934 19531.19 6643 195.31 6447.69 13083.5135 13083.51 6643 130.84 6512.16 6571.3436 6571.34 6643 65.71 6577.29 -5.95

Total 23914839142.0

5Actual Interest= Total Payment-Principal Amount

=239148-200000

=39148

Effective Interest Rate= {1+(Stated Annual Interest Rate/m)}^m-1

={1+(0.12/12)}^12-1

=0.1268

So, the effective rate of interest is 12.68%

8/7/2019 Assignment on Effective Int Re Rest Rate

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ICICI BANK

1. Loan of Rs.200000, Loan Period-5 Years, Installment-Monthly, Interest Rate-12.5%

LOAN PERIOD 5YEARS

MonthBeginningAmount

MonthlyInstallment Interest

PrincipalRepayment

RemainingBalance

1 200000.00 4500 2083.33 2416.67 197583.332 197583.33 4500 2058.16 2441.84 195141.493 195141.49 4500 2032.72 2467.28 192674.224 192674.22 4500 2007.02 2492.98 190181.24

5 190181.24 4500 1981.05 2518.95 187662.296 187662.29 4500 1954.82 2545.18 185117.117 185117.11 4500 1928.30 2571.70 182545.418 182545.41 4500 1901.51 2598.49 179946.939 179946.93 4500 1874.45 2625.55 177321.38

10 177321.38 4500 1847.10 2652.90 174668.4711 174668.47 4500 1819.46 2680.54 171987.9412 171987.94 4500 1791.54 2708.46 169279.4813 169279.48 4500 1763.33 2736.67 166542.8114 166542.81 4500 1734.82 2765.18 163777.63

15 163777.63 4500 1706.02 2793.98 160983.6416 160983.64 4500 1676.91 2823.09 158160.5617 158160.56 4500 1647.51 2852.49 155308.0618 155308.06 4500 1617.79 2882.21 152425.8519 152425.85 4500 1587.77 2912.23 149513.6220 149513.62 4500 1557.43 2942.57 146571.0621 146571.06 4500 1526.78 2973.22 143597.8422 143597.84 4500 1495.81 3004.19 140593.6523 140593.65 4500 1464.52 3035.48 137558.1724 137558.17 4500 1432.90 3067.10 134491.0625 134491.06 4500 1400.95 3099.05 131392.0126 131392.01 4500 1368.67 3131.33 128260.6827 128260.68 4500 1336.05 3163.95 125096.7328 125096.73 4500 1303.09 3196.91 121899.8229 121899.82 4500 1269.79 3230.21 118669.6130 118669.61 4500 1236.14 3263.86 115405.7531 115405.75 4500 1202.14 3297.86 112107.89

8/7/2019 Assignment on Effective Int Re Rest Rate

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32 112107.89 4500 1167.79 3332.21 108775.6833 108775.68 4500 1133.08 3366.92 105408.7634 105408.76 4500 1098.01 3401.99 102006.7735 102006.77 4500 1062.57 3437.43 98569.3436 98569.34 4500 1026.76 3473.24 95096.1137 95096.11 4500 990.58 3509.42 91586.6938 91586.69 4500 954.03 3545.97 88040.7239 88040.72 4500 917.09 3582.91 84457.8140 84457.81 4500 879.77 3620.23 80837.5841 80837.58 4500 842.06 3657.94 77179.6442 77179.64 4500 803.95 3696.05 73483.5943 73483.59 4500 765.45 3734.55 69749.0544 69749.05 4500 726.55 3773.45 65975.6045 65975.60 4500 687.25 3812.75 62162.84

46 62162.84 4500 647.53 3852.47 58310.3747 58310.37 4500 607.40 3892.60 54417.7748 54417.77 4500 566.85 3933.15 50484.6349 50484.63 4500 525.88 3974.12 46510.5150 46510.51 4500 484.48 4015.52 42494.9951 42494.99 4500 442.66 4057.34 38437.6552 38437.65 4500 400.39 4099.61 34338.0453 34338.04 4500 357.69 4142.31 30195.7354 30195.73 4500 314.54 4185.46 26010.2755 26010.27 4500 270.94 4229.06 21781.21

56 21781.21 4500 226.89 4273.11 17508.0957 17508.09 4500 182.38 4317.62 13190.4758 13190.47 4500 137.40 4362.60 8827.8759 8827.87 4500 91.96 4408.04 4419.8360 4419.83 4500 46.04 4453.96 -34.13

Total 2700000

Actual Interest= Total Payment-Principal Amount

=270000-200000

=70000

Effective Interest Rate= {1+(Stated Annual Interest Rate/m)}^m-1

={1+(0.125/12)}^12-1

=0.13.24

8/7/2019 Assignment on Effective Int Re Rest Rate

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So, the effective rate of interest is 13.24%

ICICI BANK

2. Loan of Rs.200000, Loan Period-7 Years, Installment-Monthly, Interest Rate-12.5%

LOAN PERIOD 7YEARS

MonthBeginningAmount

MonthlyInstallment Interest

PrincipalRepayment

RemainingBalance

1 200000.00 3584 2083.33 1500.67 198499.332 198499.33 3584 2067.70 1516.30 196983.033 196983.03 3584 2051.91 1532.09 195450.944 195450.94 3584 2035.95 1548.05 193902.895 193902.89 3584 2019.82 1564.18 192338.716 192338.71 3584 2003.53 1580.47 190758.247 190758.24 3584 1987.06 1596.94 189161.308 189161.30 3584 1970.43 1613.57 187547.739 187547.73 3584 1953.62 1630.38 185917.36

10 185917.36 3584 1936.64 1647.36 184270.0011 184270.00 3584 1919.48 1664.52 182605.4712 182605.47 3584 1902.14 1681.86 180923.6113 180923.61 3584 1884.62 1699.38 179224.2414 179224.24 3584 1866.92 1717.08 177507.15

15 177507.15 3584 1849.03 1734.97 175772.1916 175772.19 3584 1830.96 1753.04 174019.1517 174019.15 3584 1812.70 1771.30 172247.8518 172247.85 3584 1794.25 1789.75 170458.1019 170458.10 3584 1775.61 1808.39 168649.7020 168649.70 3584 1756.77 1827.23 166822.4721 166822.47 3584 1737.73 1846.27 164976.2022 164976.20 3584 1718.50 1865.50 163110.7023 163110.70 3584 1699.07 1884.93 161225.7724 161225.77 3584 1679.44 1904.56 159321.2125 159321.21 3584 1659.60 1924.40 157396.8126 157396.81 3584 1639.55 1944.45 155452.3627 155452.36 3584 1619.30 1964.70 153487.6528 153487.65 3584 1598.83 1985.17 151502.4829 151502.48 3584 1578.15 2005.85 149496.6330 149496.63 3584 1557.26 2026.74 147469.8931 147469.89 3584 1536.14 2047.86 145422.03

8/7/2019 Assignment on Effective Int Re Rest Rate

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32 145422.03 3584 1514.81 2069.19 143352.8533 143352.85 3584 1493.26 2090.74 141262.1034 141262.10 3584 1471.48 2112.52 139149.5835 139149.58 3584 1449.47 2134.53 137015.0636 137015.06 3584 1427.24 2156.76 134858.3037 134858.30 3584 1404.77 2179.23 132679.0738 132679.07 3584 1382.07 2201.93 130477.1539 130477.15 3584 1359.14 2224.86 128252.2840 128252.28 3584 1335.96 2248.04 126004.2541 126004.25 3584 1312.54 2271.46 123732.7942 123732.79 3584 1288.88 2295.12 121437.6743 121437.67 3584 1264.98 2319.02 119118.6544 119118.65 3584 1240.82 2343.18 116775.4745 116775.47 3584 1216.41 2367.59 114407.88

46 114407.88 3584 1191.75 2392.25 112015.6347 112015.63 3584 1166.83 2417.17 109598.4648 109598.46 3584 1141.65 2442.35 107156.1149 107156.11 3584 1116.21 2467.79 104688.3250 104688.32 3584 1090.50 2493.50 102194.8251 102194.82 3584 1064.53 2519.47 99675.3552 99675.35 3584 1038.28 2545.72 97129.6453 97129.64 3584 1011.77 2572.23 94557.4054 94557.40 3584 984.97 2599.03 91958.3855 91958.38 3584 957.90 2626.10 89332.28

56 89332.28 3584 930.54 2653.46 86678.8257 86678.82 3584 902.90 2681.10 83997.7258 83997.72 3584 874.98 2709.02 81288.7059 81288.70 3584 846.76 2737.24 78551.4660 78551.46 3584 818.24 2765.76 75785.7061 75785.70 3584 789.43 2794.57 72991.1462 72991.14 3584 760.32 2823.68 70167.4663 70167.46 3584 730.91 2853.09 67314.3764 67314.37 3584 701.19 2882.81 64431.5665 64431.56 3584 671.16 2912.84 61518.7366 61518.73 3584 640.82 2943.18 58575.5567 58575.55 3584 610.16 2973.84 55601.7168 55601.71 3584 579.18 3004.82 52596.8969 52596.89 3584 547.88 3036.12 49560.7870 49560.78 3584 516.26 3067.74 46493.0371 46493.03 3584 484.30 3099.70 43393.3472 43393.34 3584 452.01 3131.99 40261.35

8/7/2019 Assignment on Effective Int Re Rest Rate

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73 40261.35 3584 419.39 3164.61 37096.7474 37096.74 3584 386.42 3197.58 33899.1675 33899.16 3584 353.12 3230.88 30668.2876 30668.28 3584 319.46 3264.54 27403.7477 27403.74 3584 285.46 3298.54 24105.2078 24105.20 3584 251.10 3332.90 20772.2979 20772.29 3584 216.38 3367.62 17404.6780 17404.67 3584 181.30 3402.70 14001.9781 14001.97 3584 145.85 3438.15 10563.8282 10563.82 3584 110.04 3473.96 7089.8683 7089.86 3584 73.85 3510.15 3579.7284 3579.72 3584 37.29 3546.71 33.00

Actual Interest= Total Payment-Principal Amount

=301056-200000

=101056

Effective Interest Rate= {1+(Stated Annual Interest Rate/m)}^m-1

={1+(0.125/12)}^12-1

=0.13.24

So, the effective rate of interest is 13.24%