Example 23: Repayment Plan: accommodating ad hoc payment
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Example 23: Repayment Plan: accommodating ad hoc payment |
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Example 23 Scenario
This example is based on the facts in Example 22: Repayment Plan: synchronise repayments with other event. See entire scenario below for full version.
In the previous example:
| • | We created a repayment plan with equal instalments. |
In this example:
| • | The customer says he can pay an extra lump sum of $1000 on 5 December 2007 when he gets paid some money due to him |
| • | We wish to calculate a regular instalment while taking that ad hoc payment into account. |
Demonstrated Features
| ► | Allowing for additional (foreseen ad hoc) payments. |
| ► | Examine relevant parts of the calculation result. |
Points of Interest
| ◆ | You can have as many arbitrary payment amounts and dates as you like, the regular instalment dates and amounts will take those into account. |
Multimedia Presentation
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Entire Scenario
There are a series of transactions on Mr Smith's account - the first one is on 16 July 2004 and the last one is on 23 November 2006, the balance is currently $6704.35.
| TX DATE | DUE/AVAIL | DESCRIPTION | AMOUNT | BALANCE | PRINCIPAL | NON-PRN |
| 16/07/2004 | 30/07/2004 | Invoice No. 504 | $950.05 | $950.05 | $950.05 | $0.00 |
| 24/01/2005 | 07/02/2005 | Invoice No. 505 | $1,482.18 | $2,432.23 | $950.05 | $1,482.18 |
| 12/10/2005 | 12/10/2005 | Cheque No. 439758 | $2,772.83CR | $340.60CR | $340.60CR | $0.00 |
| 11/11/2005 | 11/11/2005 | Dishonoured Cheque Fee | $50.00 | $290.60CR | $290.60CR | $0.00 |
| 05/11/2005 | 19/11/2005 | Invoice No. 506 | $1,313.14 | $1,022.54 | $1,022.54 | $0.00 |
| 14/01/2006 | 28/01/2006 | Invoice No. 507 | $3,071.38 | $4,093.92 | $4,093.92 | $0.00 |
| 10/04/2006 | 10/04/2006 | Cheque No. 439759 | $2,950.00CR | $1,143.92 | $1,143.92 | $0.00 |
| 26/05/2006 | 09/06/2006 | Invoice No. 508 | $7,076.15 | $8,220.07 | $8,220.07 | $0.00 |
| 15/07/2006 | 15/07/2006 | Cheque No. 439760 | $1,447.98CR | $6,772.09 | $6,772.09 | $0.00 |
| 23/11/2006 | 23/11/2006 | Cheque No. 439761 | $67.74CR | $6,704.35 | $6,704.35 | $0.00 |
He's given a lot of business over the years and has always paid up eventually, but the account has lost too much control now.
The credit supply agreement says that interest may be charged daily at the prevailing interest rate that the store pays on its own bank overdraft account, uplifted by 10% of whatever the rate is. For example 5% becomes 5.5% (5% x 1.1). The overdraft rates, before uplift, are:
From Rate
4/4/2004 4%
5/5/2005 5%
6/6/2006 6%
7/7/2007 7%
8/8/2008 8%
These rates increase as the balance increases:
Balances Over Additional Rate
$0 0.0%
$2,000 0.2%
$4,000 0.4%
$6,000 0.6%
$8,000 0.8%
The credit supply agreement also says that if the customer's account goes into credit (i.e. the store owes the customer) the store must pay the customer interest at a static rate of 2.5%.
Interest is to be calculated daily.
Interest is not compounded.
Payments are allocated to interest, then principal, then non-principal.
The account has 14 day terms. This means that invoices bear the date of sale, but payment for any items purchased on credit is not actually due for a further 14 days. Therefore interest does not run until after the 14 days has expired.
There is a legal complication with the second transaction on the account ($1482.18). No interest is chargeable on that amount because of a flaw in the credit supply agreement that wasn't fixed until later.
No interest is chargeable on the Dishonoured cheque fee of $50 either - it isn't covered by the agreement at all.
The customer has a store credit limit of $3,000 so he has managed to exceed his credit limit by $3,704.35 even before interest is taken into account.
Rather than instituting legal proceedings and destroying the prospect of a future commercial relationship with this customer, we wish to propose a repayment plan that will reduce the debt, including interest, back to the credit limit of $3,000 by 31st March 2008.
We know from the customer's store credit application form that the customer receives income from rental property every 28 days.
We know that the rent receipts started on 10 January 2003 and have been paid every 28 days since then.
The customer says that he can pay an extra lump sum of $1000 on 5 December 2007 when he gets paid some money due to him.
We wish to synchronise his instalments to us with the dates that he receives his rental income.
We believe this will increase the likelihood of compliance because the dates will be easy to remember, and money will be available before it is dissipated on other expenditure.
The repayment plan has to take past and ongoing interest into account and the first repayment has to be the first rental date on or after 21 September 2007.
We require one payment per rent receipt date and want to give the debtor a schedule which clearly sets out the date and amount of each payment, as that minimises misunderstandings and also increases the likelihood of compliance.
Calculation Results
The results generated by the program are shown below.
Calculation Result
Example 23
SUMMARY
Calculated repayment plan. If the proposed repayment schedule is followed then:
| • | The repayment period concludes by 31/03/2008. |
| • | Total interest will be one thousand and twenty-seven dollars and ninety-six cents ($1,027.96). |
| • | The total amount owing as at 31/03/2008 will be three thousand dollars and zero cents ($3,000.00) comprised of principal of three thousand dollars and zero cents ($3,000.00) and accumulated interest of zero dollars and zero cents ($0.00). |
TRANSACTION HISTORY BEFORE INTEREST IS TAKEN INTO ACCOUNT
| TX DATE | DUE/AVAIL | DESCRIPTION | AMOUNT | BALANCE | PRINCIPAL | NON-PRN |
| 16/07/2004 | 30/07/2004 | Invoice No. 504 | $950.05 | $950.05 | $950.05 | $0.00 |
| 24/01/2005 | 07/02/2005 | Invoice No. 505 | $1,482.18 | $2,432.23 | $950.05 | $1,482.18 |
| 12/10/2005 | 12/10/2005 | Cheque No. 439758 | $2,772.83CR | $340.60CR | $340.60CR | $0.00 |
| 11/11/2005 | 11/11/2005 | Dishonoured Cheque Fee | $50.00 | $290.60CR | $290.60CR | $0.00 |
| 05/11/2005 | 19/11/2005 | Invoice No. 506 | $1,313.14 | $1,022.54 | $1,022.54 | $0.00 |
| 14/01/2006 | 28/01/2006 | Invoice No. 507 | $3,071.38 | $4,093.92 | $4,093.92 | $0.00 |
| 10/04/2006 | 10/04/2006 | Cheque No. 439759 | $2,950.00CR | $1,143.92 | $1,143.92 | $0.00 |
| 26/05/2006 | 09/06/2006 | Invoice No. 508 | $7,076.15 | $8,220.07 | $8,220.07 | $0.00 |
| 15/07/2006 | 15/07/2006 | Cheque No. 439760 | $1,447.98CR | $6,772.09 | $6,772.09 | $0.00 |
| 23/11/2006 | 23/11/2006 | Cheque No. 439761 | $67.74CR | $6,704.35 | $6,704.35 | $0.00 |
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REPAYMENT SCHEDULE
No. Date Amount
1 Fri 12 Oct 2007 $533.19
2 Fri 9 Nov 2007 $533.19
3 Wed 5 Dec 2007 $1,000.00
4 Fri 7 Dec 2007 $533.19
5 Fri 4 Jan 2008 $533.19
6 Fri 1 Feb 2008 $533.19
7 Fri 29 Feb 2008 $533.19
8 Fri 28 Mar 2008 $533.17
Total $4,732.31
INTEREST CALCULATION TABLE
The following shows how the proposed repayments interact
with calculated interest.
| TX DATE | DUE/AVAIL | DESCRIPTION | DAYS | AMOUNT | BALANCE | PRINCIPAL | INTEREST | NON-PRINC |
| (Same) | 30/07/2004 | Interest rate started at 4.4% on debit balances & 2.5% on credit balances (0.01202186% & 0.0068306% per day). | $950.05DR | $950.05DR | $0.00DR | $0.00DR | ||
| (Same) | 31/12/2004 | Interest (30/07/2004 to 31/12/2004 inclusive) $950.05 × 0.01202186% × 155 days = $17.70. | 155 | $17.70DR | $967.75DR | $950.05DR | $17.70DR | $0.00DR |
| (Same) | 01/01/2005 | Days per year changed to 365. Daily interest rate now 0.01205479% on debit balances & 0.00684932% on credit balances. | $967.75DR | $950.05DR | $17.70DR | $0.00DR | ||
| 24/01/2005 | 07/02/2005 | Invoice No. 505. The transaction occurred on 24/01/2005 but was not due and payable until 07/02/2005. Entire amount added to Non-principal. | $1,482.18DR | $2,449.93DR | $950.05DR | $17.70DR | $1,482.18DR | |
| (Same) | 04/05/2005 | Interest (01/01/2005 to 04/05/2005 inclusive) $950.05 × 0.01205479% × 124 days = $14.20. | 124 | $14.20DR | $2,464.13DR | $950.05DR | $31.90DR | $1,482.18DR |
| (Same) | 05/05/2005 | Interest rate on debit balances changed to amount-dependent rates (namely 5.5% from $0.00, then 5.72% from $2,000.00, then 5.94% from $4,000.00, then 6.16% from $6,000.00, then 6.38% from $8,000.00) (currently 0.01506849% per day). | $2,464.13DR | $950.05DR | $31.90DR | $1,482.18DR | ||
| (Same) | 11/10/2005 | Interest (05/05/2005 to 11/10/2005 inclusive) $950.05 × 0.01506849% × 160 days = $22.91. | 160 | $22.91DR | $2,487.04DR | $950.05DR | $54.81DR | $1,482.18DR |
| (Same) | 12/10/2005 | Cheque No. 439758. Payment applied partly to interest ($54.81), partly to principal ($1,235.84), and partly to Non-principal ($1,482.18). | $2,772.83CR | $285.79CR | $285.79CR | $0.00DR | $0.00DR | |
| (Same) | 11/11/2005 | Dishonoured Cheque Fee. Entire amount added to principal. | $50.00DR | $235.79CR | $235.79CR | $0.00DR | $0.00DR | |
| (Same) | 18/11/2005 | Interest (12/10/2005 to 18/11/2005 inclusive) $235.79CR × 0.00684932% × 38 days = $0.61CR. | 38 | $0.61CR | $236.40CR | $235.79CR | $0.61CR | $0.00DR |
| 05/11/2005 | 19/11/2005 | Invoice No. 506. The transaction occurred on 05/11/2005 but was not due and payable until 19/11/2005. Payment was applied partly to interest ($0.61) and partly to principal ($1,312.53). | $1,313.14DR | $1,076.74DR | $1,076.74DR | $0.00DR | $0.00DR | |
| (Same) | 27/01/2006 | Interest (19/11/2005 to 27/01/2006 inclusive) $1,076.74 × 0.01506849% × 70 days = $11.36. | 70 | $11.36DR | $1,088.10DR | $1,076.74DR | $11.36DR | $0.00DR |
| 14/01/2006 | 28/01/2006 | Invoice No. 507. The transaction occurred on 14/01/2006 but was not due and payable until 28/01/2006. Entire amount added to principal. | $3,071.38DR | $4,159.48DR | $4,148.12DR | $11.36DR | $0.00DR | |
| (Same) | 09/04/2006 | Interest (28/01/2006 to 09/04/2006 inclusive) $4,148.12 × 0.01627397% × 72 days = $48.60. | 72 | $48.60DR | $4,208.08DR | $4,148.12DR | $59.96DR | $0.00DR |
| (Same) | 10/04/2006 | Cheque No. 439759. Payment was applied partly to interest ($59.96) and partly to principal ($2,890.04). | $2,950.00CR | $1,258.08DR | $1,258.08DR | $0.00DR | $0.00DR | |
| (Same) | 05/06/2006 | Interest (10/04/2006 to 05/06/2006 inclusive) $1,258.08 × 0.01506849% × 57 days = $10.81. | 57 | $10.81DR | $1,268.89DR | $1,258.08DR | $10.81DR | $0.00DR |
| (Same) | 06/06/2006 | Interest rate on debit balances changed to amount-dependent rates (namely 6.6% from $0.00, then 6.82% from $2,000.00, then 7.04% from $4,000.00, then 7.26% from $6,000.00, then 7.48% from $8,000.00) (currently 0.01808219% per day). | $1,268.89DR | $1,258.08DR | $10.81DR | $0.00DR | ||
| (Same) | 08/06/2006 | Interest (06/06/2006 to 08/06/2006 inclusive) $1,258.08 × 0.01808219% × 3 days = $0.68. | 3 | $0.68DR | $1,269.57DR | $1,258.08DR | $11.49DR | $0.00DR |
| 26/05/2006 | 09/06/2006 | Invoice No. 508. The transaction occurred on 26/05/2006 but was not due and payable until 09/06/2006. Entire amount added to principal. | $7,076.15DR | $8,345.72DR | $8,334.23DR | $11.49DR | $0.00DR | |
| (Same) | 14/07/2006 | Interest (09/06/2006 to 14/07/2006 inclusive) $8,334.23 × 0.02049315% × 36 days = $61.49. | 36 | $61.49DR | $8,407.21DR | $8,334.23DR | $72.98DR | $0.00DR |
| (Same) | 15/07/2006 | Cheque No. 439760. Payment was applied partly to interest ($72.98) and partly to principal ($1,375.00). | $1,447.98CR | $6,959.23DR | $6,959.23DR | $0.00DR | $0.00DR | |
| (Same) | 22/11/2006 | Interest (15/07/2006 to 22/11/2006 inclusive) $6,959.23 × 0.01989041% × 131 days = $181.33. | 131 | $181.33DR | $7,140.56DR | $6,959.23DR | $181.33DR | $0.00DR |
| (Same) | 23/11/2006 | Cheque No. 439761. Payment applied entirely to interest. | $67.74CR | $7,072.82DR | $6,959.23DR | $113.59DR | $0.00DR | |
| (Same) | 06/07/2007 | Interest (23/11/2006 to 06/07/2007 inclusive) $6,959.23 × 0.01989041% × 226 days = $312.83. | 226 | $312.83DR | $7,385.65DR | $6,959.23DR | $426.42DR | $0.00DR |
| (Same) | 07/07/2007 | Interest rate on debit balances changed to amount-dependent rates (namely 7.7% from $0.00, then 7.92% from $2,000.00, then 8.14% from $4,000.00, then 8.36% from $6,000.00, then 8.58% from $8,000.00) (currently 0.02290411% per day). | $7,385.65DR | $6,959.23DR | $426.42DR | $0.00DR | ||
| (Same) | 11/10/2007 | Interest (07/07/2007 to 11/10/2007 inclusive) $6,959.23 × 0.02290411% × 97 days = $154.61. | 97 | $154.61DR | $7,540.26DR | $6,959.23DR | $581.03DR | $0.00DR |
| (Same) | 12/10/2007 | Proposed repayment #1 ($533.19): The payment will be applied entirely to interest ($533.19). | $533.19CR | $7,007.07DR | $6,959.23DR | $47.84DR | $0.00DR | |
| (Same) | 08/11/2007 | Interest (12/10/2007 to 08/11/2007 inclusive) $6,959.23 × 0.02290411% × 28 days = $44.63. | 28 | $44.63DR | $7,051.70DR | $6,959.23DR | $92.47DR | $0.00DR |
| (Same) | 09/11/2007 | Proposed repayment #2. The payment will be applied partly to principal ($440.72), and partly to interest ($92.47). | $533.19CR | $6,518.51DR | $6,518.51DR | $0.00DR | $0.00DR | |
| (Same) | 05/12/2007 | Interest (09/11/2007 to 05/12/2007 inclusive) $6,518.51 × 0.02290411% × 27 days = $40.31. | 27 | $40.31DR | $6,558.82DR | $6,518.51DR | $40.31DR | $0.00DR |
| (Same) | 05/12/2007 | Proposed repayment #3. The payment will be applied partly to principal ($959.69), and partly to interest ($40.31). | $1,000.00CR | $5,558.82DR | $5,558.82DR | $0.00DR | $0.00DR | |
| (Same) | 06/12/2007 | Interest (06/12/2007) $5,558.82 × 0.02230137% × 1 day = $1.24. | 1 | $1.24DR | $5,560.06DR | $5,558.82DR | $1.24DR | $0.00DR |
| (Same) | 07/12/2007 | Proposed repayment #4. The payment will be applied partly to principal ($531.95), and partly to interest ($1.24). | $533.19CR | $5,026.87DR | $5,026.87DR | $0.00DR | $0.00DR | |
| (Same) | 31/12/2007 | Interest (07/12/2007 to 31/12/2007 inclusive) $5,026.87 × 0.02230137% × 25 days = $28.03. | 25 | $28.03DR | $5,054.90DR | $5,026.87DR | $28.03DR | $0.00DR |
| (Same) | 01/01/2008 | Days per year changed to 366. Daily interest rate now 0.02224044% on debit balances & 0.0068306% on credit balances. | $5,054.90DR | $5,026.87DR | $28.03DR | $0.00DR | ||
| (Same) | 03/01/2008 | Interest (01/01/2008 to 03/01/2008 inclusive) $5,026.87 × 0.02224044% × 3 days = $3.35. | 3 | $3.35DR | $5,058.25DR | $5,026.87DR | $31.38DR | $0.00DR |
| (Same) | 04/01/2008 | Proposed repayment #5. The payment will be applied partly to principal ($501.81), and partly to interest ($31.38). | $533.19CR | $4,525.06DR | $4,525.06DR | $0.00DR | $0.00DR | |
| (Same) | 31/01/2008 | Interest (04/01/2008 to 31/01/2008 inclusive) $4,525.06 × 0.02224044% × 28 days = $28.18. | 28 | $28.18DR | $4,553.24DR | $4,525.06DR | $28.18DR | $0.00DR |
| (Same) | 01/02/2008 | Proposed repayment #6. The payment will be applied partly to principal ($505.01), and partly to interest ($28.18). | $533.19CR | $4,020.05DR | $4,020.05DR | $0.00DR | $0.00DR | |
| (Same) | 28/02/2008 | Interest (01/02/2008 to 28/02/2008 inclusive) $4,020.05 × 0.02224044% × 28 days = $25.03. | 28 | $25.03DR | $4,045.08DR | $4,020.05DR | $25.03DR | $0.00DR |
| (Same) | 29/02/2008 | Proposed repayment #7. The payment will be applied partly to principal ($508.16), and partly to interest ($25.03). | $533.19CR | $3,511.89DR | $3,511.89DR | $0.00DR | $0.00DR | |
| (Same) | 27/03/2008 | Interest (29/02/2008 to 27/03/2008 inclusive) $3,511.89 × 0.02163934% × 28 days = $21.28. | 28 | $21.28DR | $3,533.17DR | $3,511.89DR | $21.28DR | $0.00DR |
| (Same) | 28/03/2008 | Proposed repayment #8. The payment will be applied partly to principal ($511.89), and partly to interest ($21.28). | $533.17CR | $3,000.00DR | $3,000.00DR | $0.00DR | $0.00DR | |
| Final Balance | 1337 | $3,000.00DR | $3,000.00DR | $0.00DR | $0.00DR |
NOTIONAL INTEREST CALCULATION
The following describes how the proposed repayments interact
with calculated interest.
(a) On 30/07/2004 the opening principal was $950.05, the interest rate on debit balances was amount-dependent rates (namely 4.4% from $0.00, then 4.62% from $2,000.00, then 4.84% from $4,000.00, then 5.06% from $6,000.00, then 5.28% from $8,000.00), the interest rate on credit balances was 2.5% per annum, and the days per year base used to convert the annual interest rates into daily interest rates was 366.
(b) Debits and Credits are each applied to interest then to principal then to non-principal.
(c) Calculated interest on 31/12/2004 because it was the last day before the days per year base changed (from 366 to 365) on 01/01/2005. Interest on $950.05 (principal) at 4.4% per annum × 155 days (30/07/2004 to 31/12/2004 inclusive) ÷ 366 (days per year) is $17.70, resulting in a new unpaid interest balance of $17.70 ($0.00 plus $17.70).
(d) On 01/01/2005 the days per year base used to convert the annual interest rate into the daily interest rate changed to 365. The daily interest rate is now 0.01205479% on debit balances & 0.00684932% on credit balances.
(e) Debit on 07/02/2005: "Invoice No. 505" $1,482.18. The transaction occurred on 24/01/2005 but was not due and payable until 07/02/2005. The entire amount was added to Non-principal, leaving a new Non-principal balance of $1,482.18 ($0.00 plus $1,482.18).
(f) Calculated interest on 04/05/2005 because it was the last day before the interest rate changed on 05/05/2005. Interest on $950.05 (principal) at 4.4% per annum × 124 days (01/01/2005 to 04/05/2005 inclusive) ÷ 365 (days per year) is $14.20, resulting in a new unpaid interest balance of $31.90 ($17.70 plus $14.20).
(g) On 05/05/2005 the interest rate on debit balances changed to amount-dependent rates (namely 5.5% from $0.00, then 5.72% from $2,000.00, then 5.94% from $4,000.00, then 6.16% from $6,000.00, then 6.38% from $8,000.00).
(h) Calculated interest on 11/10/2005 because it was the last day before the balance of principal changed on 12/10/2005. Interest on $950.05 (principal) at 5.5% per annum × 160 days (05/05/2005 to 11/10/2005 inclusive) ÷ 365 (days per year) is $22.91, resulting in a new unpaid interest balance of $54.81 ($31.90 plus $22.91).
(i) Credit on 12/10/2005: "Cheque No. 439758" $2,772.83CR. The payment was applied partly to interest ($54.81), partly to principal ($1,235.84), and partly to Non-principal ($1,482.18). This left a new unpaid interest balance of $0.00 ($54.81 minus $54.81), a new principal balance of $285.79CR ($950.05 minus $1,235.84), and a new Non-principal balance of $0.00 ($1,482.18 minus $1,482.18).
(j) Debit on 11/11/2005: "Dishonoured Cheque Fee" $50.00. The entire amount was added to principal, leaving a new principal balance of $235.79CR ($285.79CR plus $50.00).
(k) Calculated interest on 18/11/2005 because it was the last day before the balance of principal changed on 19/11/2005. Interest on $235.79CR (principal) at 2.5% per annum × 38 days (12/10/2005 to 18/11/2005 inclusive) ÷ 365 (days per year) is $0.61CR, resulting in a new unpaid interest balance of $0.61CR ($0.00 plus $0.61CR).
(l) Debit on 19/11/2005: "Invoice No. 506" $1,313.14. The transaction occurred on 05/11/2005 but was not due and payable until 19/11/2005. The amount was applied partly to interest ($0.61) and partly to principal ($1,312.53) leaving a new unpaid interest balance of $0.00 ($0.61CR plus $0.61) and a new principal balance of $1,076.74 ($235.79CR plus $1,312.53).
(m) Calculated interest on 27/01/2006 because it was the last day before the balance of principal changed on 28/01/2006. Interest on $1,076.74 (principal) at 5.5% per annum × 70 days (19/11/2005 to 27/01/2006 inclusive) ÷ 365 (days per year) is $11.36, resulting in a new unpaid interest balance of $11.36 ($0.00 plus $11.36).
(n) Debit on 28/01/2006: "Invoice No. 507" $3,071.38. The transaction occurred on 14/01/2006 but was not due and payable until 28/01/2006. The entire amount was added to principal, leaving a new principal balance of $4,148.12 ($1,076.74 plus $3,071.38).
(o) Calculated interest on 09/04/2006 because it was the last day before the balance of principal changed on 10/04/2006. Interest on $4,148.12 (principal) at 5.94% per annum × 72 days (28/01/2006 to 09/04/2006 inclusive) ÷ 365 (days per year) is $48.60, resulting in a new unpaid interest balance of $59.96 ($11.36 plus $48.60).
(p) Credit on 10/04/2006: "Cheque No. 439759" $2,950.00CR. The payment was applied partly to interest ($59.96) and partly to principal ($2,890.04) leaving a new unpaid interest balance of $0.00 ($59.96 minus $59.96) and a new principal balance of $1,258.08 ($4,148.12 minus $2,890.04).
(q) Calculated interest on 05/06/2006 because it was the last day before the interest rate changed on 06/06/2006. Interest on $1,258.08 (principal) at 5.5% per annum × 57 days (10/04/2006 to 05/06/2006 inclusive) ÷ 365 (days per year) is $10.81, resulting in a new unpaid interest balance of $10.81 ($0.00 plus $10.81).
(r) On 06/06/2006 the interest rate on debit balances changed to amount-dependent rates (namely 6.6% from $0.00, then 6.82% from $2,000.00, then 7.04% from $4,000.00, then 7.26% from $6,000.00, then 7.48% from $8,000.00).
(s) Calculated interest on 08/06/2006 because it was the last day before the balance of principal changed on 09/06/2006. Interest on $1,258.08 (principal) at 6.6% per annum × 3 days (06/06/2006 to 08/06/2006 inclusive) ÷ 365 (days per year) is $0.68, resulting in a new unpaid interest balance of $11.49 ($10.81 plus $0.68).
(t) Debit on 09/06/2006: "Invoice No. 508" $7,076.15. The transaction occurred on 26/05/2006 but was not due and payable until 09/06/2006. The entire amount was added to principal, leaving a new principal balance of $8,334.23 ($1,258.08 plus $7,076.15).
(u) Calculated interest on 14/07/2006 because it was the last day before the balance of principal changed on 15/07/2006. Interest on $8,334.23 (principal) at 7.48% per annum × 36 days (09/06/2006 to 14/07/2006 inclusive) ÷ 365 (days per year) is $61.49, resulting in a new unpaid interest balance of $72.98 ($11.49 plus $61.49).
(v) Credit on 15/07/2006: "Cheque No. 439760" $1,447.98CR. The payment was applied partly to interest ($72.98) and partly to principal ($1,375.00) leaving a new unpaid interest balance of $0.00 ($72.98 minus $72.98) and a new principal balance of $6,959.23 ($8,334.23 minus $1,375.00).
(w) Calculated interest on 22/11/2006 because it was the last day before the balance of principal changed on 23/11/2006. Interest on $6,959.23 (principal) at 7.26% per annum × 131 days (15/07/2006 to 22/11/2006 inclusive) ÷ 365 (days per year) is $181.33, resulting in a new unpaid interest balance of $181.33 ($0.00 plus $181.33).
(x) Credit on 23/11/2006: "Cheque No. 439761" $67.74CR. The payment was applied entirely to interest, leaving a new unpaid interest balance of $113.59 ($181.33 minus $67.74).
(y) Calculated interest on 06/07/2007 because it was the last day before the interest rate changed on 07/07/2007. Interest on $6,959.23 (principal) at 7.26% per annum × 226 days (23/11/2006 to 06/07/2007 inclusive) ÷ 365 (days per year) is $312.83, resulting in a new unpaid interest balance of $426.42 ($113.59 plus $312.83).
(z) On 07/07/2007 the interest rate on debit balances changed to amount-dependent rates (namely 7.7% from $0.00, then 7.92% from $2,000.00, then 8.14% from $4,000.00, then 8.36% from $6,000.00, then 8.58% from $8,000.00).
(aa) Calculated interest on 11/10/2007 because it was the last day before the balance of principal changed on 12/10/2007. Interest on $6,959.23 (principal) at 8.36% per annum × 97 days (07/07/2007 to 11/10/2007 inclusive) ÷ 365 (days per year) is $154.61, resulting in a new unpaid interest balance of $581.03 ($426.42 plus $154.61).
(ab) Proposed repayment #1 ($533.19) on 12/10/2007: The payment will be applied entirely to interest ($533.19) leaving a new unpaid interest balance of $47.84 ($581.03 minus $533.19).
(ac) Calculated interest on 08/11/2007 because it was the last day before the balance of principal changed on 09/11/2007. Interest on $6,959.23 (principal) at 8.36% per annum × 28 days (12/10/2007 to 08/11/2007 inclusive) ÷ 365 (days per year) is $44.63, resulting in a new unpaid interest balance of $92.47 ($47.84 plus $44.63).
(ad) Proposed repayment #2 ($533.19) on 09/11/2007: The payment will be applied partly to principal ($440.72), and partly to interest ($92.47) leaving a new principal balance of $6,518.51 ($6,959.23 minus $440.72), and a new unpaid interest balance of $0.00 ($92.47 minus $92.47).
(ae) Calculated interest on 05/12/2007. Interest on $6,518.51 (principal) at 8.36% per annum × 27 days (09/11/2007 to 05/12/2007 inclusive) ÷ 365 (days per year) is $40.31, resulting in a new unpaid interest balance of $40.31 ($0.00 plus $40.31).
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(af) Proposed repayment #3 ($1,000.00) on 05/12/2007: The payment will be applied partly to principal ($959.69), and partly to interest ($40.31) leaving a new principal balance of $5,558.82 ($6,518.51 minus $959.69), and a new unpaid interest balance of $0.00 ($40.31 minus $40.31).
(ag) Calculated interest on 06/12/2007 because it was the last day before the balance of principal changed on 07/12/2007. Interest on $5,558.82 (principal) at 8.14% per annum × 1 day (06/12/2007) ÷ 365 (days per year) is $1.24, resulting in a new unpaid interest balance of $1.24 ($0.00 plus $1.24).
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(ah) Proposed repayment #4 ($533.19) on 07/12/2007: The payment will be applied partly to principal ($531.95), and partly to interest ($1.24) leaving a new principal balance of $5,026.87 ($5,558.82 minus $531.95), and a new unpaid interest balance of $0.00 ($1.24 minus $1.24).
(ai) Calculated interest on 31/12/2007 because it was the last day before the days per year base changed (from 365 to 366) on 01/01/2008. Interest on $5,026.87 (principal) at 8.14% per annum × 25 days (07/12/2007 to 31/12/2007 inclusive) ÷ 365 (days per year) is $28.03, resulting in a new unpaid interest balance of $28.03 ($0.00 plus $28.03).
(aj) On 01/01/2008 the days per year base used to convert the annual interest rate into the daily interest rate changed to 366. The daily interest rate is now 0.02224044% on debit balances & 0.0068306% on credit balances.
(ak) Calculated interest on 03/01/2008 because it was the last day before the balance of principal changed on 04/01/2008. Interest on $5,026.87 (principal) at 8.14% per annum × 3 days (01/01/2008 to 03/01/2008 inclusive) ÷ 366 (days per year) is $3.35, resulting in a new unpaid interest balance of $31.38 ($28.03 plus $3.35).
(al) Proposed repayment #5 ($533.19) on 04/01/2008: The payment will be applied partly to principal ($501.81), and partly to interest ($31.38) leaving a new principal balance of $4,525.06 ($5,026.87 minus $501.81), and a new unpaid interest balance of $0.00 ($31.38 minus $31.38).
(am) Calculated interest on 31/01/2008 because it was the last day before the balance of principal changed on 01/02/2008. Interest on $4,525.06 (principal) at 8.14% per annum × 28 days (04/01/2008 to 31/01/2008 inclusive) ÷ 366 (days per year) is $28.18, resulting in a new unpaid interest balance of $28.18 ($0.00 plus $28.18).
(an) Proposed repayment #6 ($533.19) on 01/02/2008: The payment will be applied partly to principal ($505.01), and partly to interest ($28.18) leaving a new principal balance of $4,020.05 ($4,525.06 minus $505.01), and a new unpaid interest balance of $0.00 ($28.18 minus $28.18).
(ao) Calculated interest on 28/02/2008 because it was the last day before the balance of principal changed on 29/02/2008. Interest on $4,020.05 (principal) at 8.14% per annum × 28 days (01/02/2008 to 28/02/2008 inclusive) ÷ 366 (days per year) is $25.03, resulting in a new unpaid interest balance of $25.03 ($0.00 plus $25.03).
(ap) Proposed repayment #7 ($533.19) on 29/02/2008: The payment will be applied partly to principal ($508.16), and partly to interest ($25.03) leaving a new principal balance of $3,511.89 ($4,020.05 minus $508.16), and a new unpaid interest balance of $0.00 ($25.03 minus $25.03).
(aq) Calculated interest on 27/03/2008 because it was the last day before the balance of principal changed on 28/03/2008. Interest on $3,511.89 (principal) at 7.92% per annum × 28 days (29/02/2008 to 27/03/2008 inclusive) ÷ 366 (days per year) is $21.28, resulting in a new unpaid interest balance of $21.28 ($0.00 plus $21.28).
(ar) Proposed repayment #8 ($533.17) on 28/03/2008: The payment will be applied partly to principal ($511.89), and partly to interest ($21.28) leaving a new principal balance of $3,000.00 ($3,511.89 minus $511.89), and a new unpaid interest balance of $0.00 ($21.28 minus $21.28).
(as) Total amount owing as at 28/03/2008 will be $3,000.00 comprising principal $3,000.00 plus accumulated interest $0.00.
(at) Interest on $3,000.00 will continue to accumulate at zero dollars and sixty-five cents ($0.65) per day.
DEFERRAL OF LEGAL ACTION - AGREED REPAYMENT SCHEDULE
Deferral of legal action has been agreed on the condition that you strictly comply with the following repayment plan.
If you don't strictly comply with this plan then legal action can be instituted against you without further notice. Proceedings can be for recovery of the total liability (including interest and costs), or some lesser amount - for example the amount of any overdue instalment(s).
Please keep this timetable in a prominent place and ensure that each payment is made by the specified date and in the designated amount.
Please note that the repayment amounts take into account ongoing interest, and credit for each payment received. We will provide full details of that calculation if requested.
No. Date Amount
1 Fri 12 Oct 2007 $533.19
2 Fri 9 Nov 2007 $533.19
3 Wed 5 Dec 2007 $1,000.00
4 Fri 7 Dec 2007 $533.19
5 Fri 4 Jan 2008 $533.19
6 Fri 1 Feb 2008 $533.19
7 Fri 29 Feb 2008 $533.19
8 Fri 28 Mar 2008 $533.17
Total $4,732.31
Calculation Notes
The following information is provided to give you a complete understanding of the calculation, so even the finest details are available if ever needed.
1. The debit interest rates have been taken from the debit rates file (my overdraft rates no 2).
2. The main calculation options (such as days per year, credit application order and rounding) have been taken from the debit rates file where they are embedded as part of the rates specification. These options can be changed for individual calculations in Settings|Options, or for all new cases in Settings|Setup.
3. The credit interest rates (if required) have been taken from the settings on the main form.
4. The debit file rate definition has been partially modified (overridden) on the main form.
5. The accuracy of the repayment plan instalment calculator depends in part on the setting you give for "Maximum Iterations" because the calculator stops trying after that many attempts. If a calculation is not accurate enough - for example there is a balance left over at the end - then try increasing the number by at least 10.
6. Decimal Rounding. When converting from an annual rate of interest to a daily rate of interest, and except if overridden in an interest rates file, the program has rounded-up to 8 decimal places, eg 8.12512324924555 is rounded to 8.12512325%. You can change the setting in Settings|Options.
7. Calendar Year. You are using the "Calendar Year" method for converting the annual interest rate to the daily interest rate. In many cases this is the most accurate setting but you should be aware that it adds complexity to the calculation report because it requires additional interest calculations before and after each leap year. If you require a simpler report and it is appropriate to do so then choose a different setting. The setting is either embedded in the Options section of the selected interest rate file or else it is set in Settings|Options on the main form. In either case you can change or override the setting for a particular calculation in Settings|Options. Please note that such settings only apply to the current calculation. You can change the default value that affects all new calculations in Settings|Setup. The default value cannot however automatically override any setting in the Options part of an interest rate file - you still have to override on an individual basis as explained above.
