Calculates a differential (declining balance) loan payment schedule.
A differentiated (reducing-balance) loan has a fixed principal repayment each month, so the interest portion — and therefore the total payment — shrinks every month.
Monthly principal = Loan / N Interest this month = Remaining balance × (annual rate / 12) Payment this month = Monthly principal + Interest this month
Loan $12,000, 12 months, 10% annual rate. Monthly principal = $1,000. Month 1 interest = $12,000 × (0.10/12) = $100. Month 1 payment = $1,100. Month 2 balance = $11,000; payment = $1,000 + $91.67 = $1,091.67.
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