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maybe something along the lines of the loan interest applied every 6 months instead of 12?
100% not sure about this. I am just an intern
If that is the case, shouldnt he multiply by 2? I dont think that is the right answer.. but I could be wrong..
Interest compounds semi-annually on the balance of the loan!
^
GIVE THIS GUY HIS $5!
Hi, could you just explain this a bit more? Because the model is dividing the 63 months into 24. If the lecturer was actually trying to say that interest compounds semi-annually, shouldn't he divide the 63 months into total of 6, not 24????
I get that 63 month is divided first by 12 because it is being annualized. If like you said, the interest is compounding semiannually, it should be multiplied by 2, not divided by 2..
For example, if the interest is compounding semiannually for 63 months, there should be compounding every 6 month for 63 months.. approximately 10 times of compounding. But dividin 63 months into 24 months means compounding very 2.625 years...
Am I on the wrong track?? I am not trying to not give away $5.. just trying to understand the model so I can go forward..
You'll need to divide by 6.
Please PM me to arrange Venmo Transfer.
Interest compounds semi-annually, not annually, on the loan balance. PM me and I'll give you my name for you to send the money
Please see my comment above, and I will venmo the first person who makes me understand it. Thank you.
interest compounds semi-annually on the balance of the loan
in for $5 bucks
On another note F34 is the sum of the time horizon... he then goes on in the formula you stepped into to redo the sum for F31:F33... why not just reference the sum in F34...
Yeah... I was like "wtf?" too
There's an article by REFM titled "How to estimate development financing costs on a back of the envelope basis (links to free tools included)" that I think covers this. Sorry don't know how to link it in the comments.
Wow.. the article u mentioned literally explains the shit I was wondering about. Thank you. Let me know your venmo id. I will send you $5.
No need friend, just pay it forward next time you see someone on this thread that has a question you can answer. I was going through the same REFM BOE last week and had the same question so it was fresh in my mind.
https://www.getrefm.com/model-for-success/how-to-estimate-development-f…
This is the link if anyone else is wondering.
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