14:52 Aug 24, 2002 |
English to German translations [PRO] Bus/Financial - Accounting / Accounting | |||||||
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| Selected response from: Eva Blanar Hungary Local time: 06:24 | ||||||
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5 | just an explanation |
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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 |
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