<h1 id="reading-2021-07-06">Reading 2021-07-06<a aria-hidden="true" class="anchor-heading icon-link" href="#reading-2021-07-06"></a></h1>
<h2 id="metadata">Metadata<a aria-hidden="true" class="anchor-heading icon-link" href="#metadata"></a></h2>
<ul>
<li>Ref:: <a href="https://corporatefinanceinstitute.com/resources/knowledge/credit/equated-monthly-installment-emi/">Corporate Finance Institute</a></li>
<li>Title:: What is an Equated Monthly Installment (EMI)?</li>
<li>Author:: </li>
<li>Year of publication:: </li>
<li>Category:: Blog</li>
<li>Topic:: </li>
</ul>
<h2 id="notes-from-reading">Notes from reading<a aria-hidden="true" class="anchor-heading icon-link" href="#notes-from-reading"></a></h2>
<ul>
<li>An equated monthly installment (EMI) is a type of payment made by borrowers to lenders on a monthly basis in a fixed amount. </li>
<li>EMIs include both the interest and principal amounts. </li>
<li>After a certain number of EMIs are made, the loan will be fully paid off.</li>
</ul>
<h3 id="reducing-balance-method">Reducing-Balance Method<a aria-hidden="true" class="anchor-heading icon-link" href="#reducing-balance-method"></a></h3>
<div class="math math-display"><math xmlns="http://www.w3.org/1998/Math/MathML" display="block"><semantics><mrow><menclose notation="box"><mstyle scriptlevel="0" displaystyle="false"><mstyle scriptlevel="0" displaystyle="false"><mstyle scriptlevel="0" displaystyle="true"><mrow><mi>A</mi><mo>=</mo><mi>P</mi><mo>∗</mo><mfrac><mrow><mi>r</mi><mo stretchy="false">(</mo><mn>1</mn><mo>+</mo><mi>r</mi><msup><mo stretchy="false">)</mo><mi>n</mi></msup></mrow><mrow><mo stretchy="false">(</mo><mn>1</mn><mo>+</mo><mi>r</mi><msup><mo stretchy="false">)</mo><mi>n</mi></msup><mo>−</mo><mn>1</mn></mrow></mfrac></mrow></mstyle></mstyle></mstyle></menclose></mrow><annotation encoding="application/x-tex">\boxed{A=P*\frac {r(1+r)^n} {(1+r)^n-1}}</annotation></semantics></math>A=P∗(1+r)n−1r(1+r)n​​</div>
where
<ul>
<li>A = Periodic EMI amount</li>
<li>P = Principal borrowed</li>
<li>r = Periodic interest rate (annual interest rate/12)</li>
<li>n = Total number of payment (number of months during the loan tenure)</li>
</ul>
<blockquote>
NOTE: the period can be month, year or whatever equal period you can imagine. Just make the appropriate change for <code>r</code> and <code>n</code>
</blockquote>
<blockquote>
NOTE: Or simply use PMT function in Excel. Try this <a href="https://app.box.com/s/pfkwtannn6jd89qqagayrcxac3kvhjw8">example spreadsheet</a>
</blockquote>
<hr>
Backlinks
<ul>
<li><a href="/notes/4gPts-9ZNxtR4_EKMY8zD">Mua vs Thuê nhà - Bạn quyết định dựa vào yếu tố nào?</a></li>
</ul>

Equated monthly installment

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