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In the last two Reflektor, we have seen that there are four important numbers that are associated with

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any launch.

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The first one is the principal amount.

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This is the amount we get from bank at the start of our loan.

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The second one is the rate this the rate of interest that we have to pay on the principal amount.

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Then the next key parameter is term.

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This is the time period in which we have to repay our loan.

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And the fourth is the repayment amount, this is the amount we have to repay for our loan at the end

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of each term, all these four key parameters are interlinked.

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And if you have information about any of the three parameters, then you can find out the fourth parameter.

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So in this first exercise, we will find out the repayment amount if we have principal amount.

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Great.

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And Tom.

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In the second exercise, we will find the rate of interest if we have the principal amount.

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The repayment amount and the number of dump's.

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And in the last exercise, we will find the number of items or number of periods, if we have the principal

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amount, the rate of interest and the repayment amount.

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So now let's first start with finding out the repayment amount from these three parameters, principal

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amount.

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Great.

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And.

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The formula to find out the repayment amount is BMB, so we have to rate equal to BMT and in this formula,

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first we have to mention the rate, the rate of interest, which is the cell.

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Then we have to mention the number of times.

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Which is this?

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And then for the third parameter, we have to mention the principal amount, which is this, if we don't,

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we will get this as our repayment amount.

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So for three years, we have to pay around thirty nine thousand at the end of each year to repay our

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loan.

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Now, this repayment is concerned that I have copied the formula to the other two years as well.

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Now, as we have discussed in our Turay lecture, part of this repaid amount is certainly toward interest

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and the rest of the amount is deducted from our principal amount.

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So to find out what is the distribution of this interest and principal repayment.

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We can use our principal amount and rate of interest to find it for the interest amount and First-Tier,

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we have to multiply what principal amount with the rate.

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So the principal amount is around 200000 and it pays nine percent.

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So the total interest paid and forced repayment term is nine thousand, so out of this thirty nine thousand

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five hundred and five, we have repaid nine thousand as interest and rest of the amount as principal

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repayment.

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So to find out principal repayment in the first year, we will just subtract.

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These two numbers.

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So as you can see in the first period, we have paid interest of nine thousand and we have repaid the

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principal amount by around thirty thousand five hundred dollars.

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So the balance of our principal amount at the end of year one is.

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We will subtract this principal amount we paid.

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From the principal among.

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Since we have mentioned repaid amount as as a negative number, we are adding these two numbers.

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So at the end of year one, our principle balance is around sixty nine thousand for year two, we will

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pay nine percent interest on this final principal amount.

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So to find out and dress for second year, we will multiply this balance amount with the rate of interest.

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So you can see for the year, too, we are being around six thousand two hundred and fifty dollars as

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interest.

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And the total amount we paid.

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Was thirty nine thousand five hundred and five, so if we subtract this too, this is the amount we

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are paying.

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Towards Principal Lamont.

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So you can see and hear when we paid only 30000 towards principal, and this year we are paying around

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33000 towards principal.

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So the balance amount after year two is, again, this 69, which was the previous year balance, and

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then minus 33, which is the amount we paid towards principal.

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We're here to enter, so you can see that at the end of two years, only 36000 is remaining out of 100000,

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knowing that we will pay nine percent interest on the remaining amount.

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So let's find out the interest we paid.

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So in the third year, we are paying around three thousand two hundred interest, again, the total

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amount we paid for this year is thirty nine thousand five hundred and five.

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And the rest of the money is going towards the principal loan, so if we subtract this to.

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So you can see that at the end of year two, this was thirty six thousand two hundred and forty three.

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This was the principal amount remaining.

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And in the third year, we are paying exactly that much amount so that we are blown free at the end

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of three years.

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So if you subtract, we will get zero here.

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So we have repaid our loan in three years.

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Where we paid a different amount towards interest and different amount towards principal and all the

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three years, but the total repaid amount remains the same, which is thirty nine thousand five hundred

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and five.

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So you can use BMT to find out this overall amount that you have to pay and then you can just use your

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mathematical formula to find out.

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Interest and part of principle, if you want to deep dive into your loan repayment structure.

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No, there is one more formula you can use to find this part of principal amount.

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You don't have to first use BMT and then calculate the interest and then calculate the part of principal.

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You can directly use another formula, which is BP empty.

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So if you just write BP MP.

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First, you have to give the rate.

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For the second parameter, you have to give the period number or item number for which you want to calculate

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the part of principle.

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So, for example, let's select to.

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Then as a parameter, we have to give a number of terms, number of terms is three.

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Then we have to give the principal amount that we have taken.

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If you calculate this will directly give you the amount you have paid towards the principal.

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So as you can see, this is exactly matching the amount we were getting before.

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So, again, you can use BMT to find total repayment amount and you can use BMB to find part of payment

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that you are paying towards the principal amount.