Video instructions and help with filling out and completing When Form 2220 Installment

Instructions and Help about When Form 2220 Installment

Hello everyone and welcome back to Ellen YouTube channel well of course we take loans for several purposes maybe a home loan or for buying a motor vehicle etc and we have to pay that amount in two installments of course that installment valve carries two elements which is principal and interest now in a blog write tips if you will see on our website we have written as to what is EMI and how do we calculate it but practically in this video we will understand as to how to calculate the repayment schedule that is the equated monthly payment shedule so let us understand quickly with the help of an excel sheet let us understand the calculation of EMI with the help of excel sheet suppose the loan amount here is two lakh rupees the tenure of loan that is the time within which you have to pay the loan is one year and you pay monthly for it so the number of payments per year is 12 suppose the rate of interest is 18 percent so this rate of interest is per annum we will calculate the rate of interest per month which is 18 percent divided by 12 now the next question is how do we calculate the monthly payment monthly payment is the function of PMT so if you type PMT on the Excel open the bracket you will see the following features on your excel sheet so this is the rate for that you need to click on the rate comma next is the nper which means number of payments next is the present value of the loan taken , type which can be kept as 0 and then the bracket is to be closed you will see that the balance that comes in is a negative figure this is because the payment is an outflow and the money will go out of a pockets and that is the reason that it amounts to a negative figure alternatively if you put a negative sign over here the figure will come as positive so that is what a monthly installment amount is now how do we calculate our balances and the EMI statement as you can see on the screen that we have made five columns which comprises of number of payments monthly installment interest amount principal amount and the balance due so we begin with the zero at the ER that is today our balance amount to be paid is rupees to lab now on the first year our monthly installment which is to be paid is rupees eighteen three three six as we calculated above now the interest amount will be the balance outstanding multiplied by the rate of interest as calculated here press ENTER and you will get the interest amount principal amount will be the monthly instalment figure minus the interest that we calculated just now and the answer will be the principal figure now the balance due will be the outstanding amount at the beginning of previous year produced by the principal amount and that is the balance due for the next year when you continue this process for the remaining eleven to twelve months you will see that at the end of seventh year the amount outstanding will come to rupees 1 8 zero six five point zero two now on the twelfth year what you need to do is put the total outstanding amount on the eleventh year add the column of principal only 12th year as shown on the screen the difference between the monthly installment amount and the principal amount will be the interest amount which is also set to be the balancing figure the resultant balance will be zero so this implies that the loan amount taken by you at the rate of 18 percent per annum is paid in such a method by following the excel sheet pattern so now you have your own excel sheet your own repayment schedule that you have prepared and now you know beforehand that how much amount you will require to pay for your loan like if it is monthly or if it is quarterly of it is yearly you know that how much amount of income you have to keep aside for the installment payment and you can calculate it with your own self in case you like the video do press the like button in case of any queries or questions or suggestions please mention in the comment box below thank you for staying connected with us happy learning