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Target and Tolerance |
  
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Target and Tolerance |
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Reduce To
The program will try to calculate the amount/time needed to reduce the balance to this amount. You will often want to reduce the amount to 0.0, i.e, eliminate the debt entirely, in which case you enter 0.0 here.
At other times you may simply want to reduce the debt to a set credit limit in which case you enter the credit limit here.
Tolerance
The program will try to find the recurring amount that will reduce the debt to the Reduce To amount (above).
If the amount it is testing results in a closing balance (debt remaining) within Tolerance of 0.0 then it will adjust the final payment to make the closing balance exactly equal to Reduce To. If the final balance is greater than Tolerance then the balancing adjustment will not be made and a non-zero closing balance will remain.
This means that you will be best served in most cases having a larger tolerance (eg $2.00) than a lesser one such as $0.05.
At the very least the tolerance should be >= $0.01 x the number of expected payments otherwise it will be mathematically impossible in most cases to calculate the instalment using whole cents.
Example.
Calin Professional Example 19
| ► | Tolerance is set at $0.05 with this result: |
| • | The total amount owing as at 01/02/2008 will be negative zero dollars and eleven cents ($0.11CR) comprised of principal of negative zero dollars and eleven cents ($0.11CR) and accumulated interest of zero dollars and zero cents ($0.00). |
REPAYMENT SCHEDULE
No. Date Amount
1 Fri 21 Sep 2007 $380.92
2 Fri 28 Sep 2007 $380.92
3 Fri 5 Oct 2007 $380.92
4 Fri 12 Oct 2007 $380.92
5 Fri 19 Oct 2007 $380.92
6 Fri 26 Oct 2007 $380.92
7 Fri 2 Nov 2007 $380.92
8 Fri 9 Nov 2007 $380.92
9 Fri 16 Nov 2007 $380.92
10 Fri 23 Nov 2007 $380.92
11 Fri 30 Nov 2007 $380.92
12 Fri 7 Dec 2007 $380.92
13 Fri 14 Dec 2007 $380.92
14 Fri 21 Dec 2007 $380.92
15 Fri 28 Dec 2007 $380.92
16 Fri 4 Jan 2008 $380.92
17 Fri 11 Jan 2008 $380.92
18 Fri 18 Jan 2008 $380.92
19 Fri 25 Jan 2008 $380.92
20 Fri 1 Feb 2008 $380.92
Total $7,618.40
If you change the tolerance to $0.11 then you would get this result. See how the final instalment has been adjusted:
| • | The total amount owing as at 01/02/2008 will be zero dollars and zero cents ($0.00) comprised of principal of zero dollars and zero cents ($0.00) and accumulated interest of zero dollars and zero cents ($0.00). |
REPAYMENT SCHEDULE
No. Date Amount
1 Fri 21 Sep 2007 $380.91
2 Fri 28 Sep 2007 $380.91
3 Fri 5 Oct 2007 $380.91
4 Fri 12 Oct 2007 $380.91
5 Fri 19 Oct 2007 $380.91
6 Fri 26 Oct 2007 $380.91
7 Fri 2 Nov 2007 $380.91
8 Fri 9 Nov 2007 $380.91
9 Fri 16 Nov 2007 $380.91
10 Fri 23 Nov 2007 $380.91
11 Fri 30 Nov 2007 $380.91
12 Fri 7 Dec 2007 $380.91
13 Fri 14 Dec 2007 $380.91
14 Fri 21 Dec 2007 $380.91
15 Fri 28 Dec 2007 $380.91
16 Fri 4 Jan 2008 $380.91
17 Fri 11 Jan 2008 $380.91
18 Fri 18 Jan 2008 $380.91
19 Fri 25 Jan 2008 $380.91
20 Fri 1 Feb 2008 $381.00
Total $7,618.29