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Hassle-free Cashflow Minute

            Lesson 6:
     Math Behind Interest Rate

        Investor Educational Series by
       Professional Investor / Developer
                David Campbell

    www.HassleFreeCashFlowInvesting.com
                ©2011 All Rights Reserved
Interest = rate x capital
Rate = interest / capital
Capital = interest / rate



www.HassleFreeCashFlowInvesting.com
Case Study: Interest = rate x capital


      $100 = 10% x $1,000



     www.HassleFreeCashFlowInvesting.com
Case Study: Rate = interest / capital


       10% = $100 / $1,000



      www.HassleFreeCashFlowInvesting.com
Case Study: Capital = interest / rate


       $1,000 = $100 / 10%



      www.HassleFreeCashFlowInvesting.com
CALCULATING PRORATED
      INTEREST




www.HassleFreeCashFlowInvesting.com
daily interest rate =
annual rate / # of days per year
     borrowers like to prorate using 365 days
  10% annual interest /365 days = 0.0274% per day

       lenders like to prorate using 360 days
  10% annual interest /365 days = 0.0278% per day



    www.HassleFreeCashFlowInvesting.com
CALCULATING PRORATED INTEREST

                            0.0277% per day
daily interest rate
                               x 108 days
x number of days
                               x $100,000
    x principal
                           $2,991.60 prorated
prorated interest
                                 interest


        www.HassleFreeCashFlowInvesting.com
David Campbell
            over $800 million of real estate
           transaction / advisory experience

            sign up for my FREE real estate
            investor education newsletter
            www.HassleFreeCashFlowInvesting.com




david@HassleFreeCashFlowInvesting.com

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Hassle-free Cashflow Minute Lesson 6: Math Behind Interest Rate

  • 1. Hassle-free Cashflow Minute Lesson 6: Math Behind Interest Rate Investor Educational Series by Professional Investor / Developer David Campbell www.HassleFreeCashFlowInvesting.com ©2011 All Rights Reserved
  • 2. Interest = rate x capital Rate = interest / capital Capital = interest / rate www.HassleFreeCashFlowInvesting.com
  • 3. Case Study: Interest = rate x capital $100 = 10% x $1,000 www.HassleFreeCashFlowInvesting.com
  • 4. Case Study: Rate = interest / capital 10% = $100 / $1,000 www.HassleFreeCashFlowInvesting.com
  • 5. Case Study: Capital = interest / rate $1,000 = $100 / 10% www.HassleFreeCashFlowInvesting.com
  • 6. CALCULATING PRORATED INTEREST www.HassleFreeCashFlowInvesting.com
  • 7. daily interest rate = annual rate / # of days per year borrowers like to prorate using 365 days 10% annual interest /365 days = 0.0274% per day lenders like to prorate using 360 days 10% annual interest /365 days = 0.0278% per day www.HassleFreeCashFlowInvesting.com
  • 8. CALCULATING PRORATED INTEREST 0.0277% per day daily interest rate x 108 days x number of days x $100,000 x principal $2,991.60 prorated prorated interest interest www.HassleFreeCashFlowInvesting.com
  • 9. David Campbell over $800 million of real estate transaction / advisory experience sign up for my FREE real estate investor education newsletter www.HassleFreeCashFlowInvesting.com david@HassleFreeCashFlowInvesting.com