Hi, I'm looking at the answer provided for PS1, Problem 2. Can someone tell me the logic behind why the high_payment is derived this way :
high_payment = (balance*(1+(interest_rate/12))**12)/12

It obviously works well, but I'd like to know where this formula comes from.
Thanks!
Kilgore

Question

Hi, I'm looking at the answer provided for PS1, Problem 2.  Can someone tell me the logic behind why the high_payment is derived this way :
high_payment = (balance*(1+(interest_rate/12))**12)/12

It obviously works well, but I'd like to know where this formula comes from.
Thanks!
Kilgore

e.mccormick · Answer

This goes over the basic and compound interest formulas: http://math.ucsd.edu/~wgarner/math4c/textbook/chapter4/compoundinterest.htm

e.mccormick · Answer

So they are finding the total after interest, then dividing it by 12 to get the payment.

anonymous · Answer

I like the wikipedia article. http://en.wikipedia.org/wiki/Compound_interest

kilgore · Answer

Thanks for the great info guys!