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Homework Statement
Consider a new Loan as below:
InterestRate = 56.558% annual in arrear
Amount = 1.000.000
Principal Payment Period = weekly (7 Days)
Term = 25 weeks
Homework Equations
How to calculate the weekly installment amount?
How's this "weekly principal payment" term has affect to the Interest rate compound period per year?
The Attempt at a Solution
two approach that I know of: (using excel)
1. compound periods per year using daily, so 1 week means 7 Days
- formula: PMT(InterestRate * 7 / 360 ,Term,-Amount,0,0)
2. compound periods per year using weekly, which is 50 week a year (I was told we only use 50 and not use 52 weeks a year, the same goes with using 360 days a year instead of 365 a year)
- formula: PMT(InterestRate / 50,Term,-Amount,0,0)
So any help? Which of the two is valid? or perhaps any other more valid approach beside those two?