The cost of capital for a asset is called the Loan Constant (Constant) or Mortgage Constant. All loans have a inescapable interest rate and, unless there is an interest-only measure to the loan, all loans will require a considerable and interest payment. The considerable is calculated based upon the amortization of the loan. Thus, if the loan has a 30-year amortization, which is equal to 360 months, the considerable must be paid in 360 installments so the loan is paid in full on the last loan payment.
The quoted interest rate of a loan is strictly the estimate of interest that loan accrues. The loan constant, on the other hand, is expressed as an interest rate that incorporates both the interest and considerable refund of a loan. The method is:
Calculate Mortgage Interest
Loan Constant = [Interest Rate / 12] / (1 - (1 / (1 + [interest rate / 12]) ^ n))
