Annuity Payments - equal installments that include interest and principal payment. Since the loan balance decreases over time, the proportion of interest in the annuity payment is higher at the beginning of the repayment schedule. Later, the proportion of interest decreases, and the proportion of principal payment increases;
$$C = \frac{PV \times r}{1-(1+r)^{-t}}$$
PV— (loan) amount;
r— interest rate;
t— period i.e., number of installments.
Annuity Payment FAQ
What is an annuity payment?
It is a fixed payment that includes both interest and principal.
How do you calculate annuity payment?
Use C = PV × r / (1 - (1 + r)^-t).
