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(17BII) TVM with introductory interest rate - Printable Version

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(17BII) TVM with introductory interest rate - Dave Britten - 07-07-2015 01:20 PM

fhub provided me with the basic formula that's in use here. This equation lets you solve TVM problems with two separate interest rates: i%1 for the first n1 periods, and i%2 for the last n2 periods. This can be useful for opening a revolving balance charge account that has a promotional introductory rate, and you'd like to calculate a uniform payment amount to pay off the balance after a set number of periods. This uses SPFV and USFV extensively, since those calculate (1+i/100)^n and ((1+i/100)^n-1)/(i/100) respectively without losing accuracy for very small values of i.

Usage: Pretty much like the built-in TVM solver, except instead of I%YR and N, you've got I%1, N1, I%2, and N2. I%1 is the annual interest rate for the first N1 periods, and I%2 is the annual interest rate for the remaining N2 periods. Make sure you set the PYR variable appropriately (probably 12 or 1).

For beginning-period payments, store 1 in BEG. For ending-period, store 0.

Line breaks added for clarity.