There are many interest calculation software out there and many interest calculation methods for amortization. The differences due to these calculation methods are usually quite small and within the acceptable 1/8% to 1/4% accuracy usually required by law.

If you are currently using other software (or have precise numbers for amortization) Margill offers the following highly specialized features enabling you to obtain precise numbers:

Day count conventions

The names below follow the ISO (International Organization for Standardization ) nomenclature:

• Actual/Actual (also known as Actual/365)
• Actual/365(Fixed)
• 30/360
• Actual/360

The differences due to day count methods are often more than 1/8% to 1/4% accuracy depending on the calculation.

Period calculation method as 1) Equal periods in a year or 2) Days in a period over total days in a year

1) “Normal – Actuarial Equal Periods” (norm used in version 2.6 and earlier) calculates taking into account equal payment periods in a year.

For example, for any monthly payment, one period will account for 1/12 of a year.

2) “Normal – Actuarial Exact Days” uses a method that takes into account the actual number of days in a period in relation to the number of days in the year.

For example, for monthly payments, January will account for 31/365 days for a non leap year (31/366 for leap year if Actual/Actual, 31/365 if Actual/365(Fixed)), whereas February will account for 28/365 for that same year (29/366 for leap year if Actual/Actual, 29/365 if Actual/365(Fixed)).

The choice can be made directly in the “Periodic Payments (Amortization)” screen through the Advanced button or in “Tools”, “Parameters”.

See the User’s Guide included in Margill for more information.

Number of weeks in a year

In calculating the amortization when payments or compounding are weekly, biweekly (every 2 weeks), or every 4 weeks, various interest calculation software will use different numbers of periods per year.

For example, in a 365-day year, weekly compounding may either be 52 times per year or 52.143 times (365 / 7) or even 52.286 (366/7).

Although few norms exist as to the right method (some laws and regulations do exist but are not always followed accurately), and the difference between both is quite small, Margill allows both options.

Either check or uncheck the boxes for the number of compounding periods in a year and the number of payment periods in a year. If the boxes are unchecked, Margill will use 52.x periods in a year as opposed to 52.

This can be done either directly in the “Periodic Payments (Amortization)” screen through the Advanced button or in “Tools”, “Parameters”.

Year base

For the following calculations : “Simple Interest”, “Compound Interest” and “Periodic Payments (Amortization)” (Simple Interest and US Rule only) that use the Actual/Actual (also known as Actual/365) Margill proposes two options to take into account the year base:

The first, most widely used, takes into account the payment anniversary date to calculate the base year.

The second, based on the civil year, divides the calculation to take into account, as a reference, the civil year. This method is also known as the ISDA method from the International Swaps and Derivatives Association.

The Year base option does not apply to the Normal Actuarial calculation Method.

See the User’s Guide included in Margill for more information.

In case of doubt as to the settings that should be used, use the Margill default settings or consult a local expert – norms may differ based on geographic location and industry.