David Campbell, professional real estate investor and developer teaches us how to calculate interest, rate, and capital for any real estate transaction.

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
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3. Case Study: Interest = rate x capital
$100 = 10% x $1,000
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4. Case Study: Rate = interest / capital
10% = $100 / $1,000
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5. Case Study: Capital = interest / rate
$1,000 = $100 / 10%
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6. CALCULATING PRORATED
INTEREST
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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
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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
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9. David Campbell
over $800 million of real estate
transaction / advisory experience
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david@HassleFreeCashFlowInvesting.com