- October 1, 2018 at 1:53 am #255691
If I am investing $100,000 at 10% interest rate plus prime rate for 5 years, what would be my ROI. It’s quite confusing to me to figure the calculations out.October 1, 2018 at 1:58 am #255817
Dock David TreeceModerator
The first thing you would need to know to get an answer to your question is prime rate. You can find out more about prime rate here: https://fitsmallbusiness.com/what-is-prime-rate-formula/. The rate is currently 5.00%, so let’s assume for this example that you’re investing $100,000 at 15% (prime + 10) for 5 years. Based on the situation you’ve outlined, your investment proceeds should look something like this:
Year 0: -$100,000 initial investment
Year 1: $19,000 interest payment
Year 2: $19,000 interest payment
Year 3: $19,000 interest payment
Year 4: $19,000 interest payment
Year 5: $19,000 interest payment
Based on this example, your ROI would be approximately 95%. This would equal your total interest payments ($19,000 x 5) divided by your initial investment of $100,000.
If we’ve misunderstood the intended structure of your investment, please feel free to provide additional information in this thread and we’ll provide a more detailed response.
Hope this helps!