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Sfm query. urgent

Nirav (Accountant) (595 Points)

03 May 2015

plz tell me the difference between calculate equal annual instalments and calculate equated annual instalments.

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3 Replies

prathamesh shelar (CA) (164 Points)
Replied 03 May 2015

equated is including interest and equal is only principal

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Tamanna (Qualified CA) (164 Points)
Replied 03 May 2015

Equal annual installments : If loan amount is 500000 and you have to repay it in 5 equal annual installments then each installment will be 100000 Equated annual installments : Loan = 500000 term= 6 yrs rate = 15% Installment = 500000/PVAF(15%,6)

Tamanna (Qualified CA) (164 Points)
Replied 03 May 2015

But you should keep it in mind that if the question says repay the PRINCIPAL in 5 equal annual installments then you need to divide the loan amount by 5. But if it only says repay the LOAN in 5 equal/equated installments then use the PVAF formula.