I am an investor. If I lend to someone on January 1, 1999, $1000 to be paid back interest at 2% per year (simple interest, ie not compounded), and on July 15, 1999, I lend the same person $1,500 more (total loan is now $2,500) but at 18%, and once again on October 15, 1999, I lend to the same person another $1,500, and the person pays me back the principle($4,000) and interest on January 1,2001: What is the total (principle plus interest) due me? The tougher question is: what was my blended rate of return on my total outlay of money? Is there a formula you can give me so that I can perform my own calculations?

Thank you
Dean



Hi Dean,

You need to do the calculations as three separate problems. The first Loan was $1000 for 2 years at 2% per year so the interest owed was

2 x 2/100 x $1000 = $40 The second loan was at 18% per year which is  18/12 = 1.5% per month. The loan was $1500 for 17 1/2 months so the interest due was 17 1/2 x 1.5/100 x $1500 = $393.75 The third loan was $1500 for 14 1/2 months so the interest due was 14 1/2 x 1.5/100 x $1500 = $326.25

I don't see how to find a "blended rate" since the time periods are different.

Harley
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