[skideeppow]

I have a couple syndicated deals and i want to find the true yield/profit. Since we are getting paid back daily (from SFS) what is the formula to figure out how much i am actually making

For instance.
$85,000 paying back 99 450 with nightly payments 5 days a week for $526. 3% fee on each payment.
I am getting paid daily on this. So what is my yield?

Would love to know the formula.

[channin19]

Typically it would be equivalent to the APR. I subtracted the fees from the total payback and came up with 35.55% to you.

[jason]

Here's a pretty nifty buy rate to APR calculator:

https://www.fundastic.com/ondeck-apr-calculator

[Sean Cash]

The real way to make yield in this business is by reinvesting every dollar you get back each day into other deals so that your capital is always deployed. These products offer investors something that nothing else does, daily compounding.

[skideeppow]

Yes Sean, I realize that. Since I'm getting paid back daily, shouldn't the yield b higher?

[Andy]

Yes Sean, I realize that. Since I'm getting paid back daily, shouldn't the yield b higher?

It is only higher if you continuously reinvest it . That is what makes the daily payments yield more. For example, if you look at daily payments of 100 vs a month payment of 2100. Both equal to 2100 at the end of the month.

As you are getting 100 a day, you can continue to reinvest it as it comes in , which will raise your yield, as opposed to having to wait to the end of the month to get the one payment of 2100 to reinvest.

[adroc]

Got to disagree with you Andy - time value of money says otherwise. One's effective yield is not driven by what one does with the money after they receive it. The yield is clearly higher when payments are received daily vs. 1 lump sum at month's end, regardless of whether I reinvest or park it under the mattress.

The formula to determine the yield is a pain because you cannot simply convert it to days (vs. years or months) as Sat/Sund do not result in payments. To get the exact %, you would need to discount each day (Mon - Fri). Using the monthly is a good ballpark unless you need to give precise figures to an investor.

[skideeppow]

yes looking for precise number. Any ideas?

[Sean Cash]

Got to disagree with you Andy - time value of money says otherwise. One's effective yield is not driven by what one does with the money after they receive it. The yield is clearly higher when payments are received daily vs. 1 lump sum at month's end, regardless of whether I reinvest or park it under the mattress.

The formula to determine the yield is a pain because you cannot simply convert it to days (vs. years or months) as Sat/Sund do not result in payments. To get the exact %, you would need to discount each day (Mon - Fri). Using the monthly is a good ballpark unless you need to give precise figures to an investor.

The problem here is that MCAs don't actually compound because no interest is being accrued. Indeed the purchase of future sales is not just a legal loophole but actually a financial one.

You are probably best off calculating the equivalent APR since an APY would be theoretical based upon imaginary compounding and an imputed interest rate.

[araskin]

I believe the "default" present value of money is calculated with inflation as the discount rate. As mentioned, this would be independent of investment.

Excel has a discount rate calculator. You would integrate a calendar to meet the business day parameter.

You could also use the nifty calculator. Make sure to deduct the fees for each payment and not 3% from the APR.

However, you are asking for a annual yield, based on reinvestment of the original principle. Instead of inflation,the discount rate would be the projected return. However, this would need to include default risk, and the starting size of two deals is too small to confidently predict the default rate.

Also, this assumes the daily payment is immediately reinvested. This is not a given; a delay in reinvestment at the beginning will significantly impact the yield.

[JayBallentine]

We have models / algorithms designed to answer this very question. PM me and I'll send the Excel file.