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Armotization Calculator

Before we dwell into the program code, we need to know some basic  financial concepts. The term loan amortization means the computation of the amount of equal periodic payments necessary to provide lender with a specific interest return and repay the loan principal over a specified period. The loan amortization process involves finding the future payments whose present value at the load interest rate equal the amount of initial principal borrowed. Lenders use a loan amortization schedule to determine these payment amounts and the allocation of each payment to interest and principal.

The formula to calculate periodic payment is

payment=Initial Principal/PVIFAn

where PVIFAn is known as present value interest factor for an annuity . The formula to compute  PVIFAn

PVIFAn =1/i - 1/i(1+i)n

where n is the number of payments. Normally you can check up a financial table  for the value of PVIFAn   and then calculate the payments manually. You can also use a  financial calculator to compute the values. However, if you already know how to write program in VB, why not create your very own financial calculator.

To calculate the payments for interest, you can multiply the initial principal with the interest rate, then use periodic payment to minus payment for interest.  To calculate the balance at the end of a period, we use the formula 

End-of_year principal=Beginning_of_year principal - periodic payment

The Interface

The code

Dim Num, n As Integer
Dim I, P, PVIFA, r, pmt, PI, PP As Double
Public Sub Cmd_Calculate_Click()
 P = Txt_Principal.Text
 Num = Txt_Num_payment.Text                  
 r = Txt_Interest.Text
 I = r / 100
 PVIFA = 1 / I - 1 / (I * (1 + I) ^ Num)
 pmt = P / PVIFA
 Lbl_Amtpayment.Caption = Round(pmt, 2)
End Sub
Private Sub Cmd_Create_Click()
 List_Amortization.AddItem "n" & vbTab & "Periodic" & vbTab & vbTab & "Payment" & vbTab & vbTab & "Payment" & vbTab & vbTab & "Balance"
 List_Amortization.AddItem "" & vbTab & "Payment" & vbTab & vbTab & "Interest" & vbTab & vbTab & "Principal"
 n = n + 1
 PI = P * I
 PP = pmt - PI
 P = P - PP
 List_Amortization.AddItem n & vbTab & Round(pmt, 2) & vbTab & vbTab & Round(PI, 2) & vbTab & vbTab & Round(PP, 2) & vbTab & vbTab & Round(P, 2)
If n = Num Then
 Exit Do
End If
End Sub

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The Tutor and webmaster of Vbtutor.net, Dr.Liew Voon Kiong , holds a Bachelor Degree in Mathematics, a Master Degree in Management and a Doctoral Degree in Business Administration. He obtained the DBA  degree from the University of South Australia.

He has been involved in programming for more than years. He created the popular online Visual Basic Tutorial  in 1996 and since then the web site has attracted millions of visitors .It is the top-ranked Visual Basic tutorial website in many search engines including Google. Besides that, he has also written a few Visual Basic related books. One of the books, Visual Basic 6 Made Easy was published by Creativespace.com, an Amazon.com publisher.

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