Example 12 - Monthly Skipped Payments

This example applies to our online demo Time Value of Money Calculator. The C-Value! program for Windows works in a similar way and has a few more features. Note, our online demo TVM calculator is limited to calculations using interest rates between 4.0% and 5.99%

Note:This topic has not been proofed and images need to be added. However, we believe that the steps are complete and accurate.

A "Special Series" loan with "Monthly Skipped" payments. It is assumed that the skipped months are permitted and that a level payment amount is desired.

1. Click the [New] button to clear any previous entries.
2. Set "Rounding" to "Ignore" by either:

• clicking on the "Rounding" button on the toolbar;
• clicking on the {Compute} menu choice and select {Rounding...};

1. For greater detail about how values are entered into C-Value!, please see "Example 1 - conventional mortgage or loan"
2. 1) Set "Compounding" to "Monthly"
3. 2) Enter 8.75% for the "Nominal Annual Rate"
4. 3) Create a "Loan" event in row one of the cash flow input area
5. A) Set the "Date" to February 15, 2004 (02/15/2004)
6. B) Set the "Amount" to $75,000.00
7. C) Set the "# Periods" to 1
8. 4) Move to the second row of the cash flow input area. Select "Payment" for the "Event" type. Initially, the regular payment amount is unknown
9. A) Set the "Date" to March 15, 2004 (03/15/2004)
10. B) Set the "Amount" to "Unknown"
11. C) Set the "# Periods" to 48
12. 5) Display the "Special Series Window" by clicking in the second row's right most column under "Special Series..."
13. A) Select the "Monthly Skip" tab at the top of the window
14. B) Make sure "Activate Monthly Skip series for the currently highlighted event" is checked
15. C) Set "Regular monthly amount" to "Unknown"
16. D) Set "Amount on skipped months" to $0.00
17. E) Check "July" and "August" for the skipped months
18. F) Click OK
19. 6) Calculate the unknown. The result is $2,232.10. This is the required level payment amount when no payments are made in either July or August
20. 7) If you want to see a detailed amortization schedule showing how the monthly payment is allocated between principal and interest click on the "Amortization" tab above the input area or press [F4]. Notice that while no payment is due in for either July or August, interest still accrues

Back to the online Time Value of Money Calculator.