Weekly Annuity Calculation Method

[k3wlm4n]

Homework Statement

Consider a new Loan as below:
InterestRate = 56.558% annual in arrear
Amount = 1.000.000
Principal Payment Period = weekly (7 Days)
Term = 25 weeks

Homework Equations

How to calculate the weekly installment amount?
How's this "weekly principal payment" term has affect to the Interest rate compound period per year?

The Attempt at a Solution

two approach that I know of: (using excel)
1. compound periods per year using daily, so 1 week means 7 Days
- formula: PMT(InterestRate * 7 / 360 ,Term,-Amount,0,0)

2. compound periods per year using weekly, which is 50 week a year (I was told we only use 50 and not use 52 weeks a year, the same goes with using 360 days a year instead of 365 a year)
- formula: PMT(InterestRate / 50,Term,-Amount,0,0)

So any help? Which of the two is valid? or perhaps any other more valid approach beside those two?

 

[member 553083]

The weekly principal payment term affects the interest rate compound period per year because it determines how often the interest is compounded. If the interest is compounded weekly, then there will be 50 compound periods per year. If the interest is compounded daily, there will be 360 compound periods per year.