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Editorial Team
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Asked: 2026-06-18T03:50:20+00:00

I have a basic app which uses Simple Interest to calculate the cost of

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I have a basic app which uses “Simple Interest” to calculate the cost of Finance.

COF = Prt  = Principal * (Rate / 12) * nPer

So for a $10,000 loan over 48 months @ 10%pa the COF is $4000

Payments are therefore fixed at the rate of:

(Principal + COF) / nPer = Monthly Payment Amount

What I would like to do is generate an Amortization Table which uses Normal Amortization, to produce the period, the amount of Interest included in the payment, the amount of principal included in the payment and the balance of the loan remaining.

Period Interest Principal Balance

I have been unable to find the calculations anywhere for determining the percentage of interest and principal that is included in each periods payment.

I cannot use the Excel formulas (ipmt and ppmt), because these are based on a Compounding Interest Formula not the Simple Interest formula I am trying to use. eg, Excel calculates the COF for a $10000 loan over 48 months @ 10%pa as $2174.04

Thanks.

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1 Answer

  1. Editorial Team

    Given the fact that you know in advance the total principal and the total interest you will pay, the payment is simply:

    P = (Principal + Interest) / 48 = (10000 + 4000) / 48 = 291.666666

    Now, just write an amortization schedule:

    Period  |  Principal (K) | Interest (I)      | Payment | Balance (B)
-------------------------------------------------------------------------
     1  | K[1] = 10000   | K[1] * 0.1 / 12   | P       | K[1] + I[1] - P
     2  | K[2] = B[1]    | K[2] * 0.1 / 12   | P       | K[2] + I[2] - P
...

    This can be solved very easily with VBA or Excel formulas.

    A bit of info

    As far as I know (or as it is known here in Mexico), this metod is called global interest: Calculate the interest you want to collect and then divide the principal and receivable interest by the number of amortization periods.

    Excel (and every other spreadsheet program I know), uses the leveled payment method considering a compound interest rate. The results obtained by Excel can be replicated with the following formula:

    P = -K / a(n,r)

    where P is the leveled payment per period, n is the number of amortization periods, r is the efective interest rate per period, and a(n,r) is the present value of an annuity:

    a(n,r) = (1 + (1 + r)^(-n)) / r

    I sugest you read “The theory of interest” (Kellison).

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