Microsoft Office

Part II
Working with Formulas and Functions
Calculating a loan with irregular payments
So far, the loan calculation examples in this chapter have involved loans with regular periodic payments. In
some cases, loan payback is irregular. For example, you may loan some money to a friend without a formal
agreements as to how he will pay the money back. You still collect interest on the loan, so you need a way
to perform the calculations based on the actual payment dates.
Figure 16.9 shows a worksheet set up to keep track of such a loan. The annual interest rate for the loan is
stored in cell B1 (named APR). The original loan amount and loan date are stored in row 5. Formulas,
beginning in row 6, track the irregular loan payments and perform calculations.
FIGURE 16.9
This worksheet tracks loan payments that are made on an irregular basis.
Column B stores the payment amount made on the date in column C. Notice that the payments are not
made on a regular basis. Also, notice that in two cases (row 11 and row 24), the payment amount is negative.
These entries represent additional borrowed money added to the loan balance. Formulas in columns D
and E calculate the amount of the payment credited toward interest and principal. Columns F and G keep a
running tally of the cumulative payments and interest amounts. Formulas in column H compute the new
loan balance after each payment. Table 16.3 lists and describes the formulas in row 6. Note that each formula
uses an IF function to determine whether the payment date in column C is missing. If so, the formula
returns an empty string, so no data appears in the cell.
302