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Sum-of-Digits

German translation: just an explanation

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14:52 Aug 24, 2002
English to German translations [PRO]
Bus/Financial - Accounting / Accounting
English term or phrase: Sum-of-Digits
I have problems with the term "sum-of-digits2 in the following paragraph:
"The Lessee Asset Accounting (LAA) module is a lease management tool that provides complete control of both finance and operating leases. It will prove invaluable to all companies that incorporate a leasing policy for asset purchases or require better controls on asset rentals.

- Manages both auto-generated and user-definable payment schedules, either in advance or in arrears.
- Provides for multiple interest calculation methods, including Equal, Actuarial and Sum-of-Digits (Rule of 78).
Does anyone know if there is an accepted translation for "Rule of 78"?
Thanks in advance.
Silvia Geissbauer
United Kingdom
Local time: 14:49
German translation:just an explanation
Explanation:
The name of Rule of 78 comes from the fact that 12! is 78 (the factorial of 12, that is, the sum of the digits from 1 to 12). The idea is that the instalments are set as:
p(i) = (I-i+1)/I! * X,
where
p(i) is the monthly instalment for the loan (interests included)
i is the number of the month
I is the total number of months
A 12 months loan, therefore, would mean the payment of
- 12/78 of the full amount in the first month,
- 11/78 in the second months
...
and only 1/78 in the last month.

I also found several Google hits, see below for useful sites.


--------------------------------------------------
Note added at 2002-08-24 15:39:42 (GMT)
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further sites, with examples:
http://www.wdfi.org/wca/consumer_credit/credit_guides/rule_o...
http://www.humboldt.edu/~mathdept/Mathcolloq/archives/Fall, \'99/sep10.html

--------------------------------------------------
Note added at 2002-08-24 15:50:20 (GMT)
--------------------------------------------------

a calculator:
http://cgi.uticaod.com/cgi-bin/calc/rule78.cgi

--------------------------------------------------
Note added at 2002-08-24 15:56:28 (GMT)
--------------------------------------------------

Sorry, I forgot to say the most important thing: at the beginning, you pay \"back\" mainly the interests, and the principal is basically unchanged, your debt starts to decline only later. This method is preferred by the banks, as in this case if you repay the whole lot of a 10-year loan after the first say, 3 years, you pay practically more interests. (I have no idea how to put it into German, sorry.)
Selected response from:

Eva Blanar
Hungary
Local time: 15:49
Grading comment
Vielen herzlichen Dank! Grüße, Silvia
4 KudoZ points were awarded for this answer

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Summary of answers provided
5just an explanation
Eva Blanar


  

Answers


43 mins   confidence: Answerer confidence 5/5
just an explanation


Explanation:
The name of Rule of 78 comes from the fact that 12! is 78 (the factorial of 12, that is, the sum of the digits from 1 to 12). The idea is that the instalments are set as:
p(i) = (I-i+1)/I! * X,
where
p(i) is the monthly instalment for the loan (interests included)
i is the number of the month
I is the total number of months
A 12 months loan, therefore, would mean the payment of
- 12/78 of the full amount in the first month,
- 11/78 in the second months
...
and only 1/78 in the last month.

I also found several Google hits, see below for useful sites.


--------------------------------------------------
Note added at 2002-08-24 15:39:42 (GMT)
--------------------------------------------------

further sites, with examples:
http://www.wdfi.org/wca/consumer_credit/credit_guides/rule_o...
http://www.humboldt.edu/~mathdept/Mathcolloq/archives/Fall, \'99/sep10.html

--------------------------------------------------
Note added at 2002-08-24 15:50:20 (GMT)
--------------------------------------------------

a calculator:
http://cgi.uticaod.com/cgi-bin/calc/rule78.cgi

--------------------------------------------------
Note added at 2002-08-24 15:56:28 (GMT)
--------------------------------------------------

Sorry, I forgot to say the most important thing: at the beginning, you pay \"back\" mainly the interests, and the principal is basically unchanged, your debt starts to decline only later. This method is preferred by the banks, as in this case if you repay the whole lot of a 10-year loan after the first say, 3 years, you pay practically more interests. (I have no idea how to put it into German, sorry.)


    Reference: http://www.yourcreditunion.com/magazine/jan99/0199_d.htm
    Reference: http://www.creditinfocenter.com/loans/autofinancing.shtml
Eva Blanar
Hungary
Local time: 15:49
Specializes in field
Native speaker of: Hungarian
PRO pts in category: 12
Grading comment
Vielen herzlichen Dank! Grüße, Silvia
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