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InterestRateBalloon ( principal ; balloon ; payment ; periods ; rate )

Find the interest rate for a balloon note

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Ralph Lilienkamp - Show more from this author Self none

  Function definition: (Copy & paste into FileMaker's Edit Custom Function window)

/* payment is amount paid per period periods is the number of payments rate is estimated interest rate per period ( non-Zero ) principal is the loan amount balloon is the final balloon payment */ Let ( R = ((Payment * (((1 + rate) ^ periods) - (1 + rate))) + (balloon * rate)) / (principal * ((1 + rate) ^ periods)) ; Case ( Abs ( Rate - R ) > .00000000001; InterestRateBalloon ( principal; balloon; payment; periods; R ) ; R )) /* the calculation is repeated until the value of R and rate are within .00000000001 */ Click to copy

This calculation uses an itertive method to solve the equation for the interest rate. It starts with an estimated rate and calculates a new rate. If the 2 rates are close enough the calculation quits. If not, the new rate is used as the estimate and the calculation is repeated. Each iteration brings the calculated rate closer to the estimaed rate.

Do not use zero as an intial rate.

 

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