Compute Method

The Compute Method is the method TValue uses to compute interest. You can choose Normal (compound interest), U.S. Rule (simple interest - no compounding), Canadian, or Rule of 78.

To change the Compute Method, choose an option from the drop-down list. The method that is highlighted is active.

Normal (compound interest) This is ordinary compound interest. This method is also known as the actuarial method. At the end of each compound period, the unpaid interest for the period is added to principal and becomes subject to interest in the following compound period. Normal payments are applied first to interest and then to principal. Learn more about Normal.

U.S. Rule (simple interest - no compounding) Similar to Normal, except that any unpaid interest is held as a separate non-interest bearing balance. Later payments are applied first to the unpaid interest. Interest is never charged on interest. When U.S. Rule is in effect, you have the option to allocate payments to principal first even when there is unpaid accrued interest. Learn more about U.S. Rule.

Canadian Payments are generally made monthly, but interest is compounded semiannually or annually. When producing an amortization schedule, an equivalent monthly rate of somewhat less than 1/6 the semiannual rate is used to apportion interest. Learn more about Canadian.

Rule of 78 A method of allocating interest over time. The total amount of interest on a loan is pre-computed. This interest total is then considered earned in proportion to the periodic time balances. Learn more about Rule of 78.

Note - Restrictions on use of Rule of 78: Cannot be used with Special Series, such as Fixed Principal Plus Interest and Percent Step series. Interest rate changes, multiple loans, open balances, or deposits/withdrawals are not allowed.