Interest Rate Convertor - Calculations

Wilson187

Hi,
I was wondering if anyone could explain the calculation to me that is used on this website? [lemonfool APR annual to monthly]
with an example below, I can't grasp the math behind it
 
Thanks,
Gary

DrEskimo

It's just the 6.69% annual rate divided by 12 for the monthly cost.

Is there a specific thing you are trying to calculate that you are struggling with?

Wilson187

DrEskimo said:

It's just the 6.69% annual rate divided by 12 for the monthly cost.

Is there a specific thing you are trying to calculate that you are struggling with?

Hi,

When you enter the 6.9 APR into this calculator it gives you the value 6.69%. I am wondering how these two figures are related? I am working on a spreadsheet for calculating car pcp payments and this is the last piece of the puzzle, understanding how to get the APR into what has been called "Annual non-compounded equivalent"

[Deleted User]

Compounded is the effect of interest on interest. Non compounded ignores this, so is slightly less.

TrickyDicky101

Wilson187 said:

DrEskimo said:

It's just the 6.69% annual rate divided by 12 for the monthly cost.

Is there a specific thing you are trying to calculate that you are struggling with?

Hi,

When you enter the 6.9 APR into this calculator it gives you the value 6.69%. I am wondering how these two figures are related? I am working on a spreadsheet for calculating car pcp payments and this is the last piece of the puzzle, understanding how to get the APR into what has been called "Annual non-compounded equivalent"

Assuming you have the APR in cell A1 then in A2 to get the monthly equivalent:

=(1+A1)^(1/12)-1

In cell A3 to get the Annual non-compounded equivalent:

=A2*12