Amortization Schedule Calculator

The first step of calculating by means of amortization schedule calculator is to multiply the current balance by the interest factor. The result is that month's interest payment. Enter that under the interest column. For example, $100,000 times .0083 equals $830. Now, subtract that month's interest payment from the monthly principal-and-interest payment. The result is that month's principal payment. Enter that under the principal column. For example, $878 minus $830 equals $48. Then, subtract that month's principal payment from the previous month's balance to get the new balance. For example, $100,000 minus $48 equals $99,952.

Continue the process. Multiply the new balance by the interest factor to get the next month's interest payment. Subtract that from the monthly payment to get the new principal payment and subtract that from the balance to get the new balance. A cautionary note:

The amortization table you calculate at home may not look precisely the same as the one that would come from a lender. That's because the lender's computers may round off some decimal points that you wouldn't, and vice versa. But in any event, said Wilkening, a home-grown amortization chart will be close enough to the real thing to give you a pretty good idea of how your loan is being paid off. It may be off by a couple of dollars, but as long as all your calculations are correct, it won't be a big deal.

Track the payments on your loan How much do you owe on your lease for the office furniture? How much interest did you pay last month on your delivery-van loan? By how much will the outstanding balance on your mortgage decrease 12 months from now? To answer these questions, you must carefully track the interest and principal components of your firm's debt.

An amortization schedule helps you do this by listing the status of a debt for each period and the related debt-service payments. You can create a simple spreadsheet (using any release of 1-2-3 or Symphony) that will tell you how loan payments are divided between principal and interest at any time during the life of the loan. Building the worksheet takes about five minutes. Once you've built it and worked through the examples, you'll be able to create your own amortization schedules in a matter of seconds.

Building the amortization worksheet To build the basic template, start with a new worksheet and set the global display format and calculation mode. In 1-2-3 press slash, select Worksheet Global Format Currency, and press Return to accept the default value of two decimal places. Then select /Worksheet Global Recalculation Manual. In Symphony, press MENU, select Settings Format Currency, press Return to accept the default value of two decimal places, then select Recalculation Method Manual Quit.

Set the width of column C to 11: With the cell pointer in column C, select /Worksheet Column Set-Width (in Symphony, MENU Width Set) and enter 11. Set the width of column D to 11. Enter the labels shown in figure 1 in cell B1 and in range A3..A11. Be sure to precede the label in cell A5 with an apostrophe. Don't yet enter anything in ranges B3..B4 and D7..D10. Enter the labels shown in row 13, then right-align these labels: Select /Range Label Right (in Symphony, MENU Range Label-Alignment Right) and specify range A13..D13. Enter backslash hyphen ( -) in cell A14 and copy cell A14 to range B14..D14.