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FAQ 1001: PPA Minimum Report - how is interest calculated on this report? |
Problem: How is interest calculated on the Minimum Report? |
Solution: ASC uses a 31-day month, 372-day year for interest calculations. EXAMPLE Valuation Date - 1/1/2022 Effective Interest Rate - 5.55% Net charges as of 1/1/2022 - 100,000 1. Interest calculation from valuation date to the end of the plan year 100,000 x (1.0555 ^(371/372)-1) = 5,535 Amount due as of end of the plan year = 105,535 2. Interest calculation from the end of the plan year to 8-1/2 months after the end of the plan year 105,535 x (1.0555 ^(263/372)-1) = 4,108 Amount due as of 8-1/2 months after the end of the plan year = 109,643 |