ANNEX II
'ANNEX III
EXAMPLES OF CALCULATION
A. CALCULATION OF THE ANNUAL PERCENTAGE RATE OF CHARGE ON A CALENDAR BASIS (1 YEAR = 365 DAYS (OR 366 DAYS FOR LEAP YEARS))
First example
Sum loaned: S = ECU 1 000 on 1 January 1994.
It is repaid in a single payment of ECU 1 200 made on 1 July 1995 i.e. 1 ½ years or 546 (= 365 + 181) days after the date of the loan.
The equation becomes:
>TABLE>
or:
>TABLE>
This amount will be rounded to 13 % (or 12,96 % if an accuracy of two decimal places is preferred).
Second example
The sum loaned is S = ECU 1 000, but the creditor retains ECU 50 for administrative expenses, so that the loan is in fact ECU 950; the repayment of ECU 1 200, as in the first example, is again made on 1 July 1995.
The equation becomes:
>TABLE>
or:
>TABLE>
This amount will be rounded to 16,9 %.
Third example
The sum loaned is ECU 1 000, on 1 January 1994, repayable in two amounts, each of ECU 600, paid after one and two years respectively.
The equation becomes:
>TABLE>
It is solved by algebra and produces i = 0,1306623 rounded to 13,1 % (or 13,07 % if an accuracy of two decimal places is preferred).
Fourth example
The sum loaned is S = ECU 1 000, on 1 January 1994, and the amounts to be paid by the borrower are:
>TABLE>
The equation becomes:
>TABLE>
This equation allows i to be calculated by successive approximations, which can be programmed on a pocket calculator.
The result is i = 0,13226 rounded to 13,2 % (or 13,23 % if an accuracy of two decimal places is preferred).
B. CALCULATION OF THE ANNUAL PERCENTAGE RATE OF CHARGE ON THE BASIS OF A STANDARD YEAR (1 YEAR = 365 DAYS OR 365,25 DAYS, 52 WEEKS, OR 12 EQUAL MONTHS)
First example
Sum loaned: S = ECU 1 000.
It is repaid in a single payment of ECU 1 200 made in 1,5 years (i.e. 1,5 × 365 = 547,5 days, 1,5 × 365,25 = 547,875 days, 1,5 × 366 = 549 days, 1,5 × 12 = 18 months, or 1,5 × 52 = 78 weeks) after the date of the loan.
The equation becomes:
>TABLE>
or:
>TABLE>
This amount will be rounded to 12,9 % (or 12,92 % if an accuracy of two decimal places is preferred).
Second example
The sum loaned is S = ECU 1 000, but the creditor retains ECU 50 for administrative expenses, so that the loan is in fact ECU 950; the repayment of ECU 1 200, as in the first example, is again made 1,5 years after the date of the loan.
The equation becomes:
>TABLE>
or:
>TABLE>
This amount will be rounded to 16,9 % (or 16,85 % if an accuracy of two decimal places is preferred).
Third example
The sum loaned is ECU 1 000, repayable in two amounts, each of ECU 600, paid after one and two years respectively.
The equation becomes:
>TABLE>
It is solved by algebra and produces i = 0,13066 which will be rounded to 13,1 % (or 13,07 % if an accuracy of two decimal places is preferred).
Fourth example
The sum loaned is S = ECU 1 000 and the amounts to be paid by the borrower are:
>TABLE>
The equation becomes:
>TABLE>
This equation allows i to be calculated by successive approximations, which can be programmed on a pocket calculator.
The result is i = 0,13185 which will be rounded to 13,2 % (or 13,19 % if an accuracy of two decimal places is preferred).`