Session

Management, Business, and Economics

Description

In this paper several types of loans offered by banks and other micro financial institutions are shown, and their respective effective interest rates are calculated. The parameters that affect the effective interest rate, which is the only real parameter that shows whether a loan is affordable or not, are considered. Some examples of loans without a fee, and those with fees are given and the effective interest rate for those loans is calculated. The mathematical technique for calculation of the effective interest rate is shown, and the financial consultant CASIO FC -100V is used to mathematically calculate the effective interest rate.

Keywords:

nominal interest rate, periodical interest rate, effective interest rate, fee

Session Chair

Oltjana Zoto

Session Co-Chair

Luciana Koprencka

Proceedings Editor

Edmond Hajrizi

ISBN

978-9951-437-25-7

First Page

96

Last Page

100

Location

Durres, Albania

Start Date

2-11-2013 12:00 PM

End Date

2-11-2013 12:15 PM

DOI

10.33107/ubt-ic.2013.39

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Included in

Business Commons

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Nov 2nd, 12:00 PM Nov 2nd, 12:15 PM

Effective Interest Rate of Different Loans

Durres, Albania

In this paper several types of loans offered by banks and other micro financial institutions are shown, and their respective effective interest rates are calculated. The parameters that affect the effective interest rate, which is the only real parameter that shows whether a loan is affordable or not, are considered. Some examples of loans without a fee, and those with fees are given and the effective interest rate for those loans is calculated. The mathematical technique for calculation of the effective interest rate is shown, and the financial consultant CASIO FC -100V is used to mathematically calculate the effective interest rate.