Capital infusion

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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Principle is 100000/12. Best use amortization using the annuity factor method LOAN AMOUNT /  1-(1+r)^-n / r.