I frequently face situations where I have to calculate the Rate of Interest/Interest Amount on a loan.
The following is the data I have in hand:
- Principal Outstanding: 772,456
- Monthly Annuity. : 47,214
I do not know the following:
- Number of annuities remaining.
- Rate of Interest
- Initial Loan Period
There are two missing variables here and only one equation to help us solve. Seems impossible to solve. But I gave it a thought and realised that the rate of Interest will be in a range of 8% p.a to 16% p.a. and also the Rate of Interest will be restricted to 1 place after decimal (Allowed : 13.10 %, Not Allowed: 13.11 %). With this data can we find out the Rate of Interest, if not exactly but at least a close approximate?
I want to develop a model to solve such problems every time I face them.
Thanks!