NeoCal User Guide

Amortization

This application uses the , and registers to calculate the amount of interest and principal for a range of payments. The remaining balance is also calculated.

The amortization calculation is sensitive to rounding errors and may not match your financial institution's calculations exactly (different institutions use different rounding rules). NeoCal will round the intermediate results based on the display setting for the number of digits to the right of the decimal place, therefore, this setting affects the results.

Let's look at a mortgage example, $200,000 for 30 years at an annual nominal rate of 7 percent with payments and compounding occurring monthly.

  1. Set the display to show two decimal places in the Preferences dialog.
  2. If the calculator is in begin mode, press to set end mode.
  3. Press to clear the financial registers.
  4. Press for monthly payments.
  5. Press to store the loan duration in the register.
  6. Press to store the interest rate.
  7. Press to store the loan amount in the present value register.
  8. Press to calculate the monthly payment amount (-1330.60).
  9. Press to amortize the first payment and display the interest amount (-1,166.67).
  10. Press (in RPN mode, press ) to display the principal for the first payment (-163.93).
  11. Press (in RPN mode, press ) to display the balance after the first payment (199,836.07).
  12. Press (in RPN mode, press ) to amortize the second payment and display the interest amount (-1,165.71). This process can be repeated through the term of the loan.

To calculate the amount of interest paid during the first year of the loan,

  1. Press to amortize the first twelve payments and display the interest amount (-13,935.65).
  2. Press to amortize the second year's payments and display the interest amount (-13,788.78).

At any time, you can press to recall the starting and ending payments for the range being amortized. (Use the button to display the starting payment.)

[ NeoCal User Guide : Financial Functions ]

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