I am trying to calculate a loan that will accrue interest for 10 months before interest/principle payments begin. How do I incorporate the accrued interest in the loan re-payment? The loan is $25K w/20% interest. Interest begins to accrue on May 1, 2011 and repayment of loan begins Feb 1, 2012.

Interest is equal to loan amount outstanding times the annual percentage rate times the length of time the loan is outstanding. If the loan is outstanding for part of the year then you have to divide the number of months outstanding by 12 months to get the precantage of the year outstanding.

You obviously do not know how to post a question, nor do you know how to show what you have attempted or what you are stuck on. I answered your post by giving you the formula to solve for the amount of interest accrued. Maybe you should just drop your accounting class because you are totally clueless.

Giving volunteer responders negatives will get you NOWHERE.

Use brute force, amortize with a term of 1 month, adding the previous amount to the next new loan amount 10 times. Then start that as the loan amount for a regular loan with monthly payments.

I hope this really is homework, because you are going to owe a lot.

Nice ego

Thank you. You gave me an idea that was easily agreed to. I decided to add the accrued/deferred interest to the first 10 payments of the loan. Yes the interest is high, but the intention is to convert the loan to stock within a few months.

Since this isn't homework, as I suspected, then it's easy: if based on yearly interest, you'll start a regular amortization at 29,166.70 after 10 months. If calculated monthly, as most are, it'll start at around 29,500 + - 10.00.

Bankrate.com has a wide variety of financial calculators for amortization tables. Check there to see if you can find what you are looking for.