What does it do?
This provides an estimate of the range of rates of repayment for a short to medium term loans for equipment lease or purchase. The calculator provides options for different rates of repayment according to the following scheme:
- 20% of aggregate Gross Margin*
- 40% of aggregate Gross Margin
- 60% of aggregate Gross Margin
- 80% of aggregate Gross Margin
- 100% of aggregate Gross Margin
The calculator provides an estimate of the number of months (n) required for full repayment of the loan.
* Gross Margin in this case is the total increase in aggregate Gross margin resulting from the introduction of the Investment (new equipment).
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Information used
The information used in this calculation includes:
- former gross margin without new equipment (OGM)
- projected gross margin with new equipment (NGM)
- total value of investment (V)
- interest rate (i)
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Forumlae
The size of each equal monthly repayment (R) is provided by the forumla:
R = V( i (1 + i)^n )/( (1 + i)^n - 1 )
Where n is the number of periods required to repay the loan. The value of n is calculated through reiteration and the value of R is given by the proportion of the incremental Gross margin according to the list in the section above (What does it do?).
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