In Lonnie Scruggs new article “How do you see Y2K Doom or Gloom” in the section about prepaying a years payments, one example he gives is this:
his monthly payment is $300, or $3600 a year
if he pays a years payments in advance at 15% discount he only pays $3060
this is a savings of $540
He says this is a yield of 31% . Can someone explain how to figure this out. I have a real estate calculator but I can’t seem to get to this number of 31%. Any help would be appreciated.