@bplus A = P * i * (1 + i) ^ n / ((1 + i) ^ n - 1) eq 1
where
A = monthly payment
P = amount borrowed !!!
The above equation works but look at this one
mp = i * (A * (1 + i) ^ n - P) / ((1 + i) ^ n - 1) eq2
where mp = monthly payment
A = Amount borrowed
i = interest rate = APR / 12
n = number of monthly payments
P = Principal
Most books on finance and anywhere on the net do not consider the above equation.
Initially, the amount borrowed = Principal. (That is where the confusion comes from) The fact is the Principal gets paid down so the amount borrowed is NOT the same as the Principal. The above equation proves that.
The amount borrowed stays the same
The Principal decreases (to zero usually)
The principal usually decreases to zero as it is paid down. If P = 0 then eq 2 can be written as
mp = i * A * (1 + i) ^ n / ((1 + i) ^ n - 1)
