How is bond interest calculated?

[syntax]

Like the title says,
how is the interest worked out? compounded monthly? continuous compounding?

The reason i am asking is a loan has been given out a bond, regular payments made, now need to work out how much is still owed to pay it off in one go.

 

[Dark Agent]

x/i (1-(1+i)^n)

x > Payment per month
i > rate of interest/100 /12
n > months left

the total is your balance

 

[Kalvaer]

I think the easiest way is to phone the bank and ask them. Some of them might have early payment clauses, admin work that has to be added etc.

 

[mikef]

I think the easiest way is to phone the bank and ask them. Some of them might have early payment clauses, admin work that has to be added etc.

Agreed iro early payment clauses, cancellation fees, etc.

Bond interest is calculated on the daily outstanding balance and credited monthly to your account (i.e. monthly compounding). Formulas are only accurate if the payment date and interest charge date are the same and no additional payments or charges were ever raised.