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

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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 Lesson 6: Math Behind Interest Rate

  1. 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. 2. Interest = rate x capitalRate = interest / capitalCapital = interest / ratewww.HassleFreeCashFlowInvesting.com
  3. 3. Case Study: Interest = rate x capital $100 = 10% x $1,000 www.HassleFreeCashFlowInvesting.com
  4. 4. Case Study: Rate = interest / capital 10% = $100 / $1,000 www.HassleFreeCashFlowInvesting.com
  5. 5. Case Study: Capital = interest / rate $1,000 = $100 / 10% www.HassleFreeCashFlowInvesting.com
  6. 6. CALCULATING PRORATED INTERESTwww.HassleFreeCashFlowInvesting.com
  7. 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. 8. CALCULATING PRORATED INTEREST 0.0277% per daydaily interest rate x 108 daysx number of days x $100,000 x principal $2,991.60 proratedprorated interest interest www.HassleFreeCashFlowInvesting.com
  9. 9. David Campbell over $800 million of real estate transaction / advisory experience sign up for my FREE real estate investor education newsletter www.HassleFreeCashFlowInvesting.comdavid@HassleFreeCashFlowInvesting.com

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