Technical Note-Generalized Formula for the Periodic Linear Gradient Series Payment in a Skip Payment Loan with Arbitrary Skips

Formato derived a useful formula of the amount of periodic level (“equal”) payment in a skip payment loan with arbitrary skips using a second-order finite difference equation. Moon rederived Formato's formula using time value of money and also extended Formato's result to the case that periodic payments occur in a geometric-gradient series. We rederived equivalent of these formulas using time value of money. It is suggested that the obtained formulas and their derivations are simpler than previous results. We also extend Formato's result to the case that periodic payments occur in a linear-gradient series.