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Thread: Total yield on loan? (interest only loan repaid in 17 days)

  1. #1
    New Member
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    Jan 2018
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    Unhappy Total yield on loan? (interest only loan repaid in 17 days)

    Hi-

    I have a question an was hoping someone could verify?

    What is the total “all-in yield”

    An interest only loan (360day) for $237,772 is provided to a borrower. It was repaid to you in 17 days.You earned $415 in interest income and also were paid a flat $50 pre-payment feeat repayment. What is the all-in yield?


    I calculated 4.15%.



    1. I determine my total income of 415 + 50 = 465
    2. I take that total income by the daysoutstanding as a “per diem” than times that over the compound period of “360”or 465 / 17 * 360 days = 9,847
    3. I take that amount and divide it into the principalbalance at pay off or 9,847 / 237,772 = 4.15




    Am I close?


  2. #2
    Elite Member
    Join Date
    Apr 2005
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    USA
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    9,500
    Pretty good. Some rounding issues.

    I did it this way. [tex]\dfrac{237772 + 415 +50}{237772} - 1 = \dfrac{238237}{237772} - 1 = 0.00195655[/tex]

    Then: [tex]0.00195655\cdot\dfrac{360}{17} = 0.041413871[/tex] This is a little less than your value of 4.15%. It is rounding only.

    Really, though, once you know the rounding rules, it makes no difference where you annualize. You annualized the earnings. I annualized the return rate.
    "Unique Answers Don't Care How You Find Them." - Many may have said it, but I hear it most from me.

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