Financial Functions 1 : Mortgage calculation

At some point, you will want to use OOo Calc to perform some sort of financial analysis. Like other topics I cover, you could write a whole book on this. As an introduction to the topic of financial functions in OOo Calc, we will look at a home mortgage example.

The PMT function calculates the regular payments needed to pay off a specified loan at a specified interest rate in a specified number of payments periods.

The arguments to the function are :

PMT(rate, nper, pv, fv, type)
where

· rate The interest rate for each of the tune periods in the nperargument. (see below)

· nper The number of time periods between now and the end of the loan. For a standard 30-year ,ortgage - with monthy paymnets - this is 360.

· pv The present value (or initial value) of the loan. Also known as the principal <lifv The future value of the loan (desired) at the end of the nper payment periods. For mortgage payment calculations, this would normally be 0.</li

· type Optional argument which controls whether payments are made at the start of a period or the end.

In the example below, we have a 30-year mortgage, $100k to be paid off monthly at an APR of 8%.

The monthly payment on this loan turns out to be $733.76. What we would also like to know is how our principal decreases over time. Each monthly payment is split between interest and principal. Early on in the repayment schedule, a greater percentage of the payment is set aside for interest.