A = P x ((i/12)/((1+(i/12)-1)^(1/360)) + (i/12))

Given:

i = Interest Rate/year

A = 3,000

P = 500,000

Determine Equation, in Terms of i = (?) [ Please, help me simplify equation, to be, in terms of i = ]

How do I Isolate Equation, and Solve(find) Equation, in terms of i ?

knownhappyman68
Sep 13, 2017

#1**0 **

I believe your equation is a TVM(Time Value of Money) formula for finding a loan payment and it should be written like this:

$3,000=$500,000* i*{[1 + i]^360 / ([1 + i]^360 - 1)}, solve for i

When you raise (1+i) to 360, that means your interest rate is already divided by 12. This appears to be a mortgage for $500,000 amortized over 30 years, or 360 months, with a monthly payment of $3,000 @ i% compounded monthly.

If I'm correct in my assumption, then there is no DIRECT solution for i%. You can only find i% through iteration and interpolation. When I plug your numbers into my computer, it comes up with a rate of 6% compounded monthly. That means the i% in your formula would be 6% / 12 =0.005, which is the monthly interest rate.

Guest Sep 13, 2017

edited by
Guest
Sep 13, 2017