Equal amount of principal and interest

Example:

The total investment of a project is 10 million yuan, of which 8 million yuan comes from the lending funds, the loan interest rate is 5.85%, and the loan period is 5 years. The annual repayment and interest payment of the loan funds are calculated. Deposit interest is 5%.

***** Same amount of interest method ****

1. Calculate an annuity using the PMT Formula

Pv = 1, 800

I = 5.85%.

N = 5

PMT = 1, 189.14

		1	2	3	4	5
	Loan accumulation at the beginning of the year	800	￥657.66	￥506.99	￥347.50	￥178.69
	Interest payable this year	46.8	38.47295	29.65876	20.32894	10.45333
	The principal shall be paid back this year	￥142.34	￥150.67	￥159.48	￥168.81	￥178.69
	Amount of principal and interest to be paid back this year	￥189.14	￥189.14	￥189.14	￥189.14	￥189.14
	PV	800
	I	5.85%
	N	5
Equal cost and interest	PMT	￥189.14

First-year interest = 800 * 5.85% = 46.8

Principal for the first year = PMT-interest for the first year = 189.14-46.8 = 142.34

Therefore, the principal for the second year = 800-the principal for the first year = 800-142.34 = 657.66

Then you can find the second year's Interest = 657.66 * 5.85% = 38.473

......................................

***** Equal principal ****

	1	2	3	4	5
Loan accumulation at the beginning of the year	800	￥640.00	￥480.00	￥320.00	￥160.00
Interest payable this year	46.8	37.44	28.08	18.72	9.36
The principal shall be paid back this year	￥160.00	￥160.00	￥160.00	￥160.00	￥160.00
Amount of principal and interest to be paid back this year	￥206.80	￥197.44	￥188.08	￥178.72	￥169.36
PV	800
I	5.85%
N	5

The same metallographic morphology of each phase = 800/5 = 160

Therefore, the interest for each period can be calculated = The amount of the initial loan for each period * Interest Rate

Repayment principal and interest amount of each period = interest + principal of each period

 

Total amount of the same amount of principal and interest paid = 945.71

Total amount of the same amount of principal = 940.40

Therefore, it is more advantageous to use the same amount of principal for repayment.