Excellent job - Excellent yield too! - Posted by Mr Donald (NORVA)

Posted by Mr Donald (NORVA) on October 22, 1998 at 11:21:00:

$3,300 return on a $300 investment over 26 months?

For this compound interest calculation, I’d try the following…

PV = $300

FV = $3,600 ($300 original+$3,300 return)

N = 26 months

Make sure PMT = 0 since this is a compound calculation, NOT an annuity.

Compute the MONTHLY interest as 10.03% per MONTH, which yields a usurious ANNUAL return of 120.35%!

N=1 FV=330.08

…

N=6 FV=532.31

…

N=12 FV=944.51

…

N=18 FV-1,675.89

…

N=24 FV=2,973.89

…

N=26 FV=3,600.00

Very interesting ROI indeed!

Now as for what the buyer will be paying you over 26 months…

Let’s use the current “Standard” interest rate on mobile home notes, 12.75% per annum, that you should use on your note.

(Personally, I’m waiting for that moment in history when it is finally announced: the Lonnie index - the mobile home note rate daily standard set by Lonnie and quoted by financial indices and journals across America. Hmmm… but I digress here.)

N = 26 months

I = 1.0675% monthly (12.75% annual)

PV= $3,600

FV= 0

I calculate a monthly payment of $159.20, for a total of $4,139.08 in payments, and interest payments of $539.08 over the term of the note.

What a great deal - any way you look at it! I’m glad you realised that all you have to do is just get out there and do it. Everything will just fall into place if you just keep at it - and you have!

Mr Donald.