What does it do?
This provides an estimate of the range of rates of repayment for a long term loan for land or property purchase. The calculator provides options for equal monthly repayment (R) rates associated with different risk levels according to the following scheme:
- Low risk repayment rates use between 5%-25% of aggregate Gross Margin*
- Medium risk repayment rates use between 30%-35% of aggregate Gross Margin
- High risk repayment rates use between 40%-45% of aggregate Gross Margin
- Very High risk repayment rates use 50% and above 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 farm Gross Margin. |
Information used
The information used in this calculation includes:
- projected aggregate gross margin with new land included
- total value of new land or property to be financed
- interest rate
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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 aggregate Gross Margin according to the list in the section above (What does it do?).
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