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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

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.