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TimeValue Software Blog

Interest Calculations with Stub Periods

By Martel Pellerin

If you are interested in manually calculating an interest amount, you need to understand the impact of a stub period or an irregular payment. When you have monthly compounding or a monthly rate period, i.e. a mortgage or auto loan, the interest calculation is based on the principal times the interest rate divided by 1/12th assuming the payments are all made timely month to month.

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