Symptom
How is the system calculating annuity repayment amount on a fixed Annuity repayment schedule in a Loan deal?
Environment
SAP S/4HANA Cloud.
Reproducing the Issue
- Go to App Create Financial Transactions.
- Enter the company code, product type (55A), transaction type (200), and partner > Create.
- Enter the Loan Amount, Start Date & End Date.
- Borrowing 50000000.00 GBP
Flow type 1100
Start date 01.01.2023
End date 31.12.2023
Inclusive : Start included
Term cat.: Fixed Term
Rounding category: Round to nearest. -
Under the interest structure, enter the following details.
Interest calculation: Fixed
Percentage Rate: 5%
Interest Calculation Method: act/365
Frequency: Manual Input
Item eff. From: 01.01.2023
Due date: 01.01.2023
Calculation Date: 01.01.2023
Every: 8 Days -
Under the repayment structure, enter the following details
Repayment Method: Annuity Repayment
Amount: 17029
Frequency: Manual Input
Item eff. From: 01.01.2023
Due date: 01.01.2023
Calculation Date: 01.01.2023
Every: 8 Days
Resolution
The Principle amount is 50,000,000.00 GBP
Interest calculated 5% every 8th day.
Repayment amount is 17,029.00 GBP every 8th day.
Cycle 1:
Interest calculated 54794.52
method is act/365 (calculates the daily interest using a 365-day year and then multiplies that by the actual number of days in each time period).
5% of 50,000,000.00 = 2500000/365 = 6489.31506489 * 8(days) = 54794.52 (total interest calculated).
Repayment amount = 17029.00 GBP
Remaining amount out of interest 37,765.52 +
New principle 50000000.00 + 37765.52 (Remaining annuity amount is added to the principle). New Principle 50037765.52
Again, for the 2nd cycle the annuity is calculated on the New Principle and added to the principle amount. The system is working as standard design.
See Also
App Library Create Financial Transaction
Keywords
act/365, Annuity, repayment, FTR_CREATE, Create Financial Transaction, FIN-FSCM-TRM-TM, product type (55A), transaction type (200). , KBA , FIN-FSCM-TRM-2CL , Treasury and Risk Management (Public Cloud) , FIN-FSCM-TRM-TM-TR , Transaction Management , How To