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/PVIFA_{n}

where **PVIFA _{n}** is known as
present value interest factor for an annuity . The formula to compute
PVIFA

** PVIFA _{n} =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 PVIFA_{n} 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**

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" Do 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 Loop End Sub

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