
Elementary Math Fractions, Percentages, Word Problems, Equations, Inequations, Factorization, Expansion 
 LinkBack  Thread Tools  Display Modes 
January 31st, 2017, 07:25 PM  #1 
Newbie Joined: Jan 2017 From: Fresno Posts: 3 Thanks: 0  Need help with a math problem
Hi. I have a word problem and I am not sure where to post because I am new. But the question is this. A borrower on January 1st funded their loan for \$258,039.34. The rate of interest was 3.50% with an "interest only" amortization. On January 14th, just 14 days later the borrower repaid the loan in full, with a \$65 fee charged and collected as an early payment penalty. Q: What is the actual allin yield of return that was earned on the loan? Help :/ I know it's more than 3.50%! Last edited by skipjack; January 31st, 2017 at 07:41 PM. 
January 31st, 2017, 07:40 PM  #2 
Member Joined: Oct 2016 From: Melbourne Posts: 77 Thanks: 35 
Just to rewrite the question so it can be read... A borrower on January 1st funded their loan for \$258 039.34. The rate of interest was 3.50% with an "interest only" amortization. On January 14th, just 14 days later, the borrower repaid the loan in full, with a \$65 fee was charged and collected as an early payment penalty. What is the actual allin yield of return that was earned on the loan? I'm not sure all the information has been given. How often is the interest compounded? 
January 31st, 2017, 07:45 PM  #3 
Newbie Joined: Jan 2017 From: Fresno Posts: 3 Thanks: 0 
It is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.

January 31st, 2017, 07:46 PM  #4 
Global Moderator Joined: Dec 2006 Posts: 18,245 Thanks: 1439 
Did you realize that January 14th is 13 days after January 1st, not 14 days?

January 31st, 2017, 09:27 PM  #5 
Newbie Joined: Jan 2017 From: Fresno Posts: 3 Thanks: 0 
Ha! 14th day,,, 
January 31st, 2017, 11:34 PM  #6 
Global Moderator Joined: Dec 2006 Posts: 18,245 Thanks: 1439 
Work out the interest charged on the loan. If, say, that is \$325, you can calculate that the \$65 fee is a fifth of the interest amount and then increase 3.5% by a fifth to give the effective rate that you want to find. For accuracy, work to at least five significant figures.


Tags 
math, problem 
Thread Tools  
Display Modes  

Similar Threads  
Thread  Thread Starter  Forum  Replies  Last Post 
Ask for a math problem  Kris Qin  Applied Math  1  February 23rd, 2015 05:36 PM 
Math Problem Help  mathmenot  Algebra  1  May 17th, 2011 10:59 AM 
Math Problem  bentick  Algebra  1  June 21st, 2010 05:16 AM 
math problem  jasperdetaeye  Algebra  3  January 19th, 2010 08:14 AM 
Easy problem in turkey math olympiad problem  codename211  Math Events  11  August 8th, 2007 08:30 PM 