Example - Monthly Skip Payment Loan

Facts     Consolidated Equipment is providing financing for Kennamer, who is purchasing a $185,000 harvester on March 1, 2025. The down payment is $30,000 and the Nominal Annual interest Rate is 7%. The loan is to be paid in equal monthly installments over a 5 year term, with payments beginning April 15, 2025. To accommodate Kennamer's seasonal cash flow problems, no payments are due in January, February, or March.

Needed     The monthly payment for the months when payments are made.

Settings     This example assumes Normal amortization (Compute Method) and a Year Length of 365 days (set in the Calculations group on the Configuration ribbon).

1. Enter the cash flow information as shown below.

   ** SCREEN SHOT HERE **

2. Click in the Amount field on the Payment / second cash line and press [F2]. Choose Monthly Skip from the drop-down menu as the type of Special Series. Enter the Skip Payment information in the expanded cash flow line as shown below.

   ** SCREEN SHOT HERE **

3. Press [F9], [Ctrl]+[U], or click Calculate from the Compute group to compute the regular monthly amount.

Solution     The Monthly Payment Amount will be $4,067.95.

Comment     The amortization schedule will show payments of $0.00 in January, February, and March of each year to represent the skipped payments.