From the course: Excel: Analyzing and Visualizing Cash Flows

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Calculate the effect of paying extra principal with each payment

Calculate the effect of paying extra principal with each payment

From the course: Excel: Analyzing and Visualizing Cash Flows

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Calculate the effect of paying extra principal with each payment

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- [Instructor] In the previous movie, I created formulas to calculate the principle and interest components of a loan. Many loans let you pay additional principle per month, which reduces the total amount of interest you owe. In this movie, I'll show you how to calculate your interest savings from paying at extra principle. My sample file is the ExtraPrinciple workbook and you can find it in the Chapter01 folder of the Exercise Files collection. In this worksheet, I have all of the information that I need for my calculations. At the top, I have the rate, the annual percentage rate of this loan. In this case, we're assuming a 30 year standard home loan with a rate of 4 3/4%. We have 12 payments per year, 360 total payments, and a loan amount of $570,000. To determine the effect of extra principle, I also have the base payment and any extra principle. At the end of the movie, I will calculate the total interest for the base loan, and also total interest paid for the loan where we pay…

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