how to calculate capital infusion by bank in case of loans
2 Replies
B Durga Prasad
(Student)
(175 Points)
Replied 18 May 2023
Certainly! In the case of loans, the capital infusion by a bank can be calculated as follows:
1. Loan Amount: Let's say the bank provides a loan of ₹1,00,000.
2. Interest Rate: Assume the annual interest rate on the loan is 5%.
3. Loan Tenure: Consider a loan tenure of 5 years.
To calculate the capital infusion:
1. Calculate the Annual Interest Expense:
Annual Interest Expense = Loan Amount * Interest Rate
= ₹1,00,000 * 0.05
= ₹5,000
2. Calculate the Monthly Interest Expense:
Monthly Interest Expense = Annual Interest Expense / 12 (assuming monthly payments)
= ₹5,000 / 12
≈ ₹417 (rounded to the nearest rupee)
3. Calculate the Total Loan Repayment per Month:
Total Loan Repayment = Loan Amount + Monthly Interest Expense
= ₹1,00,000 + ₹417
≈ ₹1,00,417 (rounded to the nearest rupee)
So, in this example, the bank's capital infusion would be ₹1,00,000, and the borrower would have to repay approximately ₹1,00,417 per month.
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Yasaswi Gomes new
(Finance )
(4514 Points)
Replied 05 June 2023
Principle is 100000/12. Best use amortization using the annuity factor method LOAN AMOUNT / 1-(1+r)^-n / r.
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