ClaytonB's latest activity

Hey, look at that, he can learn stuff. Maybe there is hope for this clanker after all...

You can cut the tail off the interest by paying early. The interest is $1,000 per year and if you pay everything in the first year, that's $11,000 instead of $15,000. The contracts can be written in other ways, but I think this is how you'd...

I don't know Captain America, why don't you explain it to us. Make this make sense. Because 'Murica and stuff... right?

So IM's statement is incorrect, as-given. "More" does not have to go to interest THAN principal early-on. That depends on the rate, payments and term. But more DOES have to go to interest in earlier payments than in later payments. That's just...

It feels like you're clarifying a point of disagreement, but I'm not sure what. With compound interest, the loan term, interest rate, and payment will determine the schedule of interest (how much is interest and how much is principal). The only...

Suppose you borrow $10,000 from me for 5 years, at 10% annual interest. We calculate as follows: $10,000 x 10% = $1,000 annual interest. $1,000 x 5 years = $5,000. Thus, the simple interest is $5,000. The total to be repaid over 5 years is...

I addressed this in a post above. The point I'm trying to highlight for non-math folks is that the compounding isn't arbitrary, it's actually just a continuous curve that we can chop up in coarse chunks if we want, but underneath, it's actually a...

👍 I don't know. Compound interest has been used for hundreds of years, so it's not a novel invention. Not automatically. Let's say I loan you $10,000 for 5 years at 10%. The total to be paid back is $10,000 + ($1,000 x 5) = $15,000. In...

Yes, that is how simple interest works. But simple interest ignores alternative uses of money. Money held for a long time is more precious than money held for a short time. That is, suppose I'm a friend and I let you "hold" $10,000 for a year...

This is how compound interest works. With simple interest, you can schedule the interest any way you want. You could front-load it, back-load it or spread it out, or any combination. But compound interest is calculated continuously, meaning, the...