1. Bilateral Loans
  2. Appendix B - Accounting Entries, Advices and Error Codes
  3. Examples of Calculating TEAC

16.15 Examples of Calculating TEAC

Example I – Simple Bearing loan

The Loan details are as follows.
  • Loan Amount – 10,000
  • Tenor 12 Months
  • Nominal Rate – 12.0%
  • Start Date – 1st Jan 2002
  • End Date – 1st Jan 2003
  • Loan Type – Bearing
  • Number of Periods– 12
  • Unit Period – Monthly
  • Sub-period 30 days
  • TEAC = 11.8372461257062%

Table 16-130 Example I – Simple Bearing loan

Date (Outflow) Period Outflow Amount Sub Periods Fraction Discounted Outflow Date (Receipts) Periods Total Pay Sub Period Fraction Discounted Value of Receipts
1/1/2002 0 10000 0.0000 10000 1/1/2002 0   0.0000 0.00
2/1/2002 1.00 - 0.0333 - 2/1/2002 1.00 100 0.0333 98.99
3/1/2002 1.00 - 0.9667 - 3/1/2002 1.00 100 0.9667 98.09
4/1/2002 3.00 - 0.0000 - 4/1/2002 3.00 100 0.0000 97.10
5/1/2002 4.00 - 0.0000 - 5/1/2002 4.00 100 0.0000 96.15
6/1/2002 5.00 - 0.0333 - 6/1/2002 5.00 100 0.0333 95.18
7/1/2002 6.00 - 0.0333 - 7/1/2002 6.00 100 0.0333 94.25
8/1/2002 7.00 - 0.0667 - 8/1/2002 7.00 100 0.0667 93.30
9/1/2002 8.00 - 0.1000 - 9/1/2002 8.00 100 0.1000 92.36
10/1/2002 9.00 - 0.1000 - 10/1/2002 9.00 100 0.1000 91.45
11/1/2002 10.00 - 0.1333 - 11/1/2002 10.00 100 0.1333 90.53
12/1/2002 11.00 - 0.1333 - 12/1/2002 11.00 100 0.1333 89.65
1/1/2003 12.00 - 0.1667 - 1/1/2003 12.00 10100 0.1667 8,962.96

Example II –True Discounted Loan

The Loan details are as follows:
  • Loan Amount – 10,000
  • Tenor 12 Months
  • Start Date – 1st Jan 2002
  • End Date – 1st Jan 2003
  • Nominal Rate – 12.0%
  • Number of Periods– 1
  • Sub-period - 360 days
  • TEAC = 10.55227%

Table 16-131 Example II –True Discounted Loan

Date (Outflow) Period Outflow Amount Sub Periods Fraction Discounted Outflow Date (Receipts) Periods Total Pay Sub Period Fraction Discounted Value of Receipts
1/1/2002 0 10000 0.0000 10000 1/1/2002 0 $0.00 0.0000 0.00
2/1/2002 0.00 - 0.0861 - 2/1/2002 0.00 0 0.0861 0.00
3/1/2002 0.00 - 0.1639 - 3/1/2002 0.00 0 0.1639 0.00
4/1/2002 0.00 - 0.2500 - 4/1/2002 0.00 0 0.2500 0.00
5/1/2002 0.00 - 0.3333 - 5/1/2002 0.00 0 0.3333 0.00
6/1/2002 0.00 - 0.4194 - 6/1/2002 0.00 0 0.4194 0.00
7/1/2002 0.00 - 0.5028 - 7/1/2002 0.00 0 0.5028 0.00
8/1/2002 0.00 - 0.5889 - 8/1/2002 0.00 0 0.5889 0.00
9/1/2002 0.00 - 0.6750 - 9/1/2002 0.00 0 0.6750 0.00
10/1/2002 0.00 - 0.7583 - 10/1/2002 0.00 0 0.7583 0.00
11/1/2002 0.00 - 0.8444 - 11/1/2002 0.00 0 0.8444 0.00
12/1/2002 0.00 - 0.9278 - 12/1/2002 0.00 0 0.9278 0.00
1/1/2003 1.00 - 0.0139 - 1/1/2003 1.00 11071.43 0.0139 10,000.00

Example III – Bearing Loan (Irregular Interest periodicity)

  • The Loan details are as follows:
  • Loan Amount – 10,000
  • Tenor 12 Months
  • Start Date – 1st Jan 2002
  • End Date – 1st Jan 2003
  • Nominal Rate – 12.0%
  • Loan Type – Bearing (Irregular Interest periods).
  • Number of Periods – 15
  • Sub-period 24 days
  • TEAC = 11.82894%

Table 16-132 Example III – Bearing Loan (Irregular Interest periodicity)

Date (Outflow) Period Outflow Amount Sub Periods Fraction Discounted Outflow Date (Receipts) Periods Total Pay Sub Period Fraction Discounted Value of Receipts
1/1/2002 0 10000 0.0000 10000 1/1/2002 0 $0.00 0.0000 0.00
2/1/2002 1.00 - 0.2917 - 2/1/2002 1.00 100 0.2917 98.99
3/1/2002 2.00 - 0.4583 - 3/1/2002 2.00 100 0.4583 98.09
4/1/2002 3.00 - 0.7500 - 4/1/2002 3.00 100 0.7500 97.10
5/1/2002 5.00 - 0.0000 5/1/2002 5.00 100 0.0000 96.15
6/1/2002 6.00 - 0.2917 - 6/1/2002 6.00 100 0.2917 95.18
7/1/2002 7.00 - 0.5417 - 7/1/2002 7.00 100 0.5417 94.25
8/1/2002 8.00 - 0.8333 - 8/1/2002 8.00 100 0.8333 93.30
9/1/2002 10.00 - 0.1250 - 9/1/2002 10.00 100 0.1250 92.35
10/1/2002 11.00 - 0.3750 - 10/1/2002 11.00 100 0.3750 91.45
11/1/2002 12.00 - 0.6667 - 11/1/2002 12.00 100 0.6667 90.53
12/1/2002 13.00 - 0.9167 12/1/2002 13.00 100 0.9167 89.64
12/5/2002 14 - .0833 - 12/5/2002 14.00 13.33 0.0833 11.93
12/12/2002 14 - .3750 - 12/12/2002 14.00 23.33 0.3750 20.84
12/27/2002 14 - .0000 - 12/27/2002 15.00 50 0.0000 44.44
1/1/2003 15.00 - 0.2083 - 1/1/2003 15.00 10013.33 0.2083 8,885.76
The Loan details are as follows:
  • Loan Amount – 10,000
  • Tenor 12 Months
  • Nominal Rate – 12.0%
  • Rate Change – 18% (on 1st March 2002)
  • Loan Type – Bearing
  • Number of Periods – 12
  • Sub Period – 30 days
  • TEAC - 16.7001012606821%

Table 16-133 Example IV – Bearing loan (with Rate Changes)

Date (Outflow) Period Outflow Amount Sub Periods Fraction Discounted Outflow Date (Receipts) Periods Total Pay Sub Period Fraction Discounted Value of Receipts
1/1/2002 0 10000 0.0000 10000 1/1/2002 0 $0.00 0.0000 0.00
2/1/2002 1.00 - 0.0333 - 2/1/2002 1.00 100 0.0333 98.58
3/1/2002 1.00 - 0.9667 - 3/1/2002 1.00 100 0.9667 97.32
4/1/2002 3.00 - 0.0000 - 4/1/2002 3.00 150 0.0000 143.91
5/1/2002 4.00 - 0.0000 - 5/1/2002 4.00 150 0.0000 141.93
6/1/2002 5.00 - 0.0333 - 6/1/2002 5.00 150 0.0333 139.92
7/1/2002 6.00 - 0.0333 7/1/2002 6.00 150 0.0333 138.00
8/1/2002 7.00 - 0.0667 - 8/1/2002 7.00 150 0.0667 136.04
9/1/2002 8.00 - 0.1000 - 9/1/2002 8.00 150 0.1000 134.11
10/1/2002 9.00 - 0.1000 - 10/1/2002 9.00 150 0.1000 132.27
11/1/2002 10.00 - 0.1333 - 11/1/2002 10.00 150 0.1333 130.40
12/1/2002 11.00 - 0.1333 - 12/1/2002 11.00 150 0.1333 128.61
1/1/2003 12.00 - 0.1667 - 1/1/2003 12.00 10150 0.1667 8,578.91
The Loan details are as follows:
  • Loan Amount – USD 10000
  • Tenor - 12 Months
  • Start Date – 1st Jan 2002
  • End Date – 1st Jan 2002
  • Prepayment Date – 1st March 2002
  • Nominal Rate – 12.0%
  • Number of Periods in a Year – 12
  • Sub-period - 30 days
  • TEAC = 12.2003939724179%

Table 16-134 Example V – Premature Liquidation

Date (Outflow) Period Outflow Amount Sub Periods Fraction VP Outflow Date (Receipts) Periods Total Pay Sub Period Fraction Discounted Value of Receipts
1/1/2002 0 10000 0.0000 10000 1/1/2002 0 $0.00 0.0000 0.00
1/31/2002 1.00 - 0.0333 - 1/31/2002 1.00 96.67 0.0000 95.70
3/1/2002 1.00 - 0.9667 - 3/1/2002 1.00 10103.33 0.9667 9,904.30
4/1/2002 3.00 - 0.0000 - 4/1/2002 3.00 0 0.0000 0.00
5/1/2002 4.00 - 0.0000 - 5/1/2002 4.00 0 0.0000 0.00
6/1/2002 5.00 - 0.0333 - 6/1/2002 5.00 0 0.0333 0.00
7/1/2002 6.00 - 0.0333 - 7/1/2002 6.00 0 0.0333 0.00
8/1/2002 7.00 - 0.0667 8/1/2002 7.00 0 0.0667 0.00
9/1/2002 8.00 - 0.1000 - 9/1/2002 8.00 0 0.1000 0.00
10/1/2002 9.00 - 0.1000 - 10/1/2002 9.00 0 0.1000 0.00
11/1/2002 10.00 - 0.1333 - 11/1/2002 10.00 0 0.1333 0.00
12/1/2002 11.00 - 0.1333 - 12/1/2002 11.00 0 0.1333 0.00
1/1/2003 12.00 - 0.1667 - 1/1/2003 12.00 0 0.1667 0.00

Parent topic: Appendix B - Accounting Entries, Advices and Error Codes