Amortization

Written by Jerry Ratzlaff on . Posted in Manufacturing Engineering

Amortization, abbreviated as A, is the paying off of debt in regular installments, till loan principle reduces to zero.

Amortization Formula

 $$\large{ A = P \; \frac{ i \; \left( \;1 \;+\; i \; \right)^{ n } }{ \left( \;1 \;+\; i \; \right)^{ n } \;-\; 1 } }$$

WHERE:

$$\large{ A }$$ = amortization

$$\large{ i }$$ = interest rate

$$\large{ P }$$ = principle

$$\large{ n }$$ = total number of payments