Resend: Loan payments vs financial calculator mismatch

[David T.]

Mike--

That computational difference you mention is 0.000145547696, which seems rather large for a rounding error....

David

--- On Tue, 10/20/09, Mike C. <subscribe307 at verizon.net> wrote:

> From: Mike C. <subscribe307 at verizon.net>
> Subject: Re: Resend: Loan payments vs financial calculator mismatch
> To: stepbystepfarm at mtdata.com
> Cc: gnucash-user at gnucash.org
> Date: Tuesday, October 20, 2009, 7:45 AM
> What Novack offered is exactly right.
> Using end of period payment, the payments in the example are
> 345.37 and using beginning of period payment, the payments
> are 343.48 using the Excel spreadsheet formulas  which
> is close enough to 343.53 to be considered rounding
> error.   The only error seems to be that
> Gnucash doesn't specify which method it is using in each
> case and they are not consistent between the druid and the
> financial calculator.
> 
> Mike or Penny Novack wrote:
> > 
> >> I guess it still is.  But "fencepost error"
> seems to be what landed in
> >> the "Hackers Dictionary" (http://www.ccil.org/jargon/jargon_21.html).
> >> Wikipedia does list 'telegraph pole' and
> 'lamp-post' error as
> >> alternitive terms:
> >> 
> >> http://en.wikipedia.org/wiki/Fencepost_error#Fencepost_error
> >> 
> >>  
> > OK, but the cause? In this case the first thing I
> would check is the right formula (computation process) being
> used for the wrong type of "annuity" (series of
> > "rents") in computing the "present value at some
> discount rate" -- sorry, but that are the terms used and
> there isn't really a difference between paying X now to
> receive a series of future payments (what we call an
> "annuity") or agreeing to make a series of payments in
> exchange for the loan principle now (what we call an
> "amortized loan"), just which side of the transaction you
> are on.
> > 
> > There are two kinds of annuities, one in which you
> receive (or make) the first payment immediately and the
> other in which you receive (or make) that first payment the
> end of the first interval and these two are off by exactly
> one period in computing the present value. An amortized loan
> is normally of the second sort.
> > 
> > Michael D Novack, FLMI
> > 
> > (and ROFLOL, exactly the sort of thing I had to learn
> getting my FLMI designation)
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