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VFCP Calculator--does this add up?


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In September, I did a lost earnings calc on the VFCP site with these figures (among several other entries):

Principal: 12,132.67

Loss Date:  4/29/2019

Recovery Date:  5/2/2019

Final Payment:  9/28/20

Amount Due:  $6.40

But, they never made the correction, so I'm re-calcing the interest with a Final Payment of 10/28/20 this time.  I entered:

Principal: 12,132.67

Loss Date:  4/29/2019

Recovery Date:  5/5/2019

Final Payment:  9/28/20

Amount Due:  $12.83

Notice I made a small mistake.  The Recovery Date is 3 days later.  And the amount due is MORE THAN TWICE AS MUCH!

When I run the original figures again with 10/28/2020 Final, it gives me the $6.40 again.

Does it make sense that a Recover Date merely 3 days later would result in a 100% higher result?

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At first thought, it seemed off.  But, you are talking about such a short loss period that an extra day is a significant increase.  If it is 4 days late and you add 1 more day, its a 25% increase.  If it is 104 days late and you add 1 day, it is less than 1% increase.

The math:

4/30 is $2.13

5/1 is $4.27

5/2 is $6.40

5/3 is $8.53

5/4 is $10.66

5/5 is $12.80

5/7 is $17.06

5/15 is $34.10

 

Counting 4/29 as a day in the loss period:

Amount doubles from 2 days to 3 days (2.13 to 4.27) +1 day

Amount doubles from 3 days to 5 days (4.27 to 8.53) +2 days

Amount  doubles from 5 days to 9 days (8.53 to 17.06) +4 days

Amount doubles from 9 days to 17 days (17.06 to 34.10) +8 days

 

The amount due doubles as the number of days late you add to the prior number of days doubles. 

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  • david rigby changed the title to VFCP Calculator--does this add up?

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