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This article contains information on how the system calculates the payment amount for a scheduled payment in Receivables Management in Microsoft Dynamics GP and in Microsoft Business Solutions - Great Plains 8.0.
Applies to: Microsoft Dynamics GP
Original KB number: 968049
More information
Information about the scheduled payment
A scheduled payment is created from a posted sales/invoice document, a debit memo document, or a service/repair document in the Receivables Scheduled Payment Entry window. To open this window, on the Transactions menu, point to Sales, and then select Scheduled Payments.
Consider the following example: If you keyed a sales document for $10,130.64, you can make it a scheduled payment in the Receivables Scheduled Payments Entry window by entering this additional information:
- Interest Type: Compound
- Schedule Amount: $ 10,130.64
- Schedule Interest Rate: 20%
- Payment Frequency: Monthly
- Number of Payments: 60
Select Calculate and then select Amortization to view the 60 lines in the amortization schedule. The first five lines will be displayed as follows:
| Payment | Due Date | Payment Amount | Principal | Interest | Principal Balance |
|---|---|---|---|---|---|
| 1 | 5/12/2009 | $268.40 | $99.56 | $168.84 | $11,131.08 |
| 2 | 6/12/2009 | $268.40 | $101.12 | $167.18 | $9,929.86 |
| 3 | 7/12/2009 | $268.40 | $102.90 | $165.50 | $9,826.96 |
| 4 | 8/12/2009 | $268.40 | $104.62 | $163.78 | $9,722.34 |
| 5 | 9/12/2009 | $268.40 | $106.36 | $162.01 | $9.615.98 |
First payment interest information
The following equation is used to calculate the first payment interest amount:
Interest amount = schedule amount x schedule interest rate / payment frequency
The following example shows how the first payment interest amount is calculated:
Interest = $10,130.64 x .20 /12(monthly)
The interest amount in this calculation is $168.84.
Monthly payment amount
The following equation is used to calculate the monthly payment amount:
Monthly Payment amount = Principal amount
/ (1 + monthly interest rate) to the N power - 1
/ monthly interest rate X (1 + monthly interest rate) to the N power.
Note
In this equation, replace the placeholder N with the number of payments.
The following example shows how the monthly payment amount is calculated:
- principal amount: $10,130.64
- monthly interest rate: 0.20/12 = 0.016667
- number of payments: 60
By using the information in this example, the following equation is used to calculate the monthly payment amount.
monthly payment amount = $10,130.64 / (1.016667) to the 60th power - 1 / .01667 x (1.016667) to the 60th power.
The payment amount in this calculation is $268.40.
Note
The last payment will make a decimal adjustment on the Payment Amount if it is needed. In this example the Payment Amount for Payment 60 is $268.32 instead of $268.40. The last payment will also show the Principle Balance as $0.00 as it has been fully paid.