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 1⁄2 years or 546 (= 365 + 181) days after the date of the loan.
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.
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:
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).