; FAQ 1001: PPA Minimum Report - how is interest calculated on this report?

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