Q: Can you explain the calculation to get the debt service constant of 0.068135?
A: The 0.068135 debt service constant is the output from an Excel function in which the inputs are a) an interest rate of 5.5%, b) 30-year amortization, and c) equal monthly payments per the screen capture on Slide 20. If you would like a copy of this Debt Service Constant Excel worksheet, please just email us at firstname.lastname@example.org.
Q: In other words, can you explain the calculation to get the debt service constant?
A: Unfortunately, there is no simple calculation for every debt constant. The calculations are based on a highly complex algorithm that would be intelligible to a mathematician but not to the average individual.
Please reference the copy below of Shockproof! Training’s Excel worksheet for calculating a debt service constant. Highlighted in yellow are the cells that you would populate in this worksheet to calculate the debt service constant and to calculate the annual debt service.
In this example the interest rate is 5.5%, the term is 30 years, and payments are monthly, so 30 years x 12 monthly payments equate to 360 monthly payments. The monthly payments are at the end of the month. Based on the input in these four cells, the algorithm calculates a debt service constant of 0.068135.