Hassle-free Cashflow Minute Investor Educational Series by Professional Investor / Developer David Campbell www.HassleFreeCashFlowInvesting.com ©2011 All Rights Reserved Lesson 6: Math Behind Interest Rate
Hassle-free Cashflow Minute Lesson 6: Math Behind Interest Rate
Nov 28, 2014
David Campbell, professional real estate investor and developer teaches us how to calculate interest, rate, and capital for any real estate transaction.
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Hassle-free Cashflow Minute
Investor Educational Series by Professional Investor / Developer
David Campbell
www.HassleFreeCashFlowInvesting.com©2011 All Rights Reserved
Lesson 6: Math Behind Interest Rate
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Interest = rate x capitalRate = interest / capitalCapital = interest / rate
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Case Study: Interest = rate x capital
$100 = 10% x $1,000
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Case Study: Rate = interest / capital
10% = $100 / $1,000
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Case Study: Capital = interest / rate
$1,000 = $100 / 10%
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CALCULATING PRORATED INTEREST
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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 days10% annual interest /365 days = 0.0278% per day
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CALCULATING PRORATED INTEREST
daily interest rate x number of days
x principal prorated interest
0.0277% per dayx 108 daysx $100,000
$2,991.60 prorated interest
David Campbellover $800 million of real estate
transaction / advisory experience
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