How to calculate total interest paid on a decreasing balance?

What’s the formula for calculating reducing balance interest rate? the interest payable (each instalment) = Outstanding loan amount x interest rate applicable for each instalment. So, after every instalment, your principal amount decreases, which in turn reflects on the effective interest rate.

How do you calculate reducing balance interest in Excel?

If you read this article, you will be clear about these two financial terms. I will also provide you the Flat and Reducing rate of interest calculator in Excel.

1. rate = 0.005.
2. nper = 60; [nper = number of total periods]
3. -loan = -100,000; [loan is negative as we want the PMT as a positive value]

Which is the method to calculate interest?

How to calculate interest rate

1. Step 1: To calculate your interest rate, you need to know the interest formula I/Pt = r to get your rate. …
2. I = Interest amount paid in a specific time period (month, year etc.)
3. P = Principle amount (the money before interest)
4. t = Time period involved.
5. r = Interest rate in decimal.