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How do you calculate payments in installments with compound interest?

There are two possible configurations for collecting installment payments with compound interest:

  • Collection at the beginning of the period;
  • Collection at the end of the period.

Beginning of the period

Collection at the beginning of the period is calculated as follows:

  1. i = Interest rate
  2. n = Number of installments
  3. PV = Present Value (total amount of the purchase without interest)
  4. Installment = 
    {"base64":"  ","img":{"width":272,"height":78,"type":"png","mime":"image/png","wUnits":"px","hUnits":"px","length":2680,"url":"https://raw.githubusercontent.com/vtexdocs/help-center-content/refs/heads/main/docs/en/tutorials/Payments/Payments%20overview/how-do-you-calculate-payments-in-installments-with-compound-interest_1.png"}}

End of the period

Collection at the end of the period is calculated as follows:

  1. i = Interest rate
  2. n = Number of installments
  3. PV = Present Value (total amount of the purchase without interest)
  4. Cash Flow Multiplier =
    {"base64":"  ","img":{"width":158,"height":107,"type":"png","mime":"image/png","wUnits":"px","hUnits":"px","length":1377,"url":"https://raw.githubusercontent.com/vtexdocs/help-center-content/refs/heads/main/docs/en/tutorials/Payments/Payments%20overview/how-do-you-calculate-payments-in-installments-with-compound-interest_2.png"}}
  5. Installment = PV x Cash Flow Multiplier

Examples

Beginning of the period

  1. i = 1%
  2. n = 12
  3. PV = 1000
    {"base64":"  ","img":{"width":502,"height":60,"type":"png","mime":"image/png","wUnits":"px","hUnits":"px","length":4906,"url":"https://raw.githubusercontent.com/vtexdocs/help-center-content/refs/heads/main/docs/en/tutorials/Payments/Payments%20overview/how-do-you-calculate-payments-in-installments-with-compound-interest_3.png"}}

End of the period

  1. i = 1%
  2. n = 12
  3. PV = 1000
  4. {"base64":"","img":{"src":"//images.contentful.com/alneenqid6w5/4CaAz5DKdaUSY0OwaGEsUu/4afb38b8c7a78977d011f2d6333800d6/conta1.png","width":800,"height":600,"type":"image/png"}}
    {"base64":"  ","img":{"width":411,"height":96,"type":"png","mime":"image/png","wUnits":"px","hUnits":"px","length":5672,"url":"https://raw.githubusercontent.com/vtexdocs/help-center-content/refs/heads/main/docs/en/tutorials/Payments/Payments%20overview/how-do-you-calculate-payments-in-installments-with-compound-interest_4.png"}}
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