What Are Loan Proceeds?

The loan yield is also known as the benchmark discount rate, which is the minimum standard benefit level of an acceptable investment project determined by a company or industry or investor from a dynamic perspective. It is the investment decision maker's valuation of the time value of project funds.

Loan yield

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The loan yield is also known as the benchmark discount rate, which is the minimum standard benefit level of an acceptable investment project determined by a company or industry or investor from a dynamic perspective. It is the investment decision maker's valuation of the time value of project funds.

Chinese name

Loan yield

nickname

Benchmark discount rate

Classification

Benchmark Yield and Parity Yield

Related fields

loan

Based on the analysis of the above factors, in the case of calculating project expenditures and income at current prices, the formula for calculating the benchmark rate of return can be summarized as follows: Among them, ic is the benchmark rate of return; i1 is the higher of the annual capital expense rate and opportunity cost; i2 is the annual risk subsidy rate; i3 is the annual inflation rate. In the case where i1, i2, and i3 are all decimals, the above formula can be simplified as: ic = i1 + i2 + i3 In the case of calculating project expenditures and income at constant prices, regardless of inflation, then: (1 + i1) (1 + i2)? 1 As can be seen from the above, the benchmark rate of return is determined by various factors and changes with the changes of the above factors. The determination of the benchmark rate of return has certain difficulties. However, the size of the benchmark rate of return is the key to the NPV method, which determines the choice of the project. Therefore, as an investor, we should carefully determine the size of the benchmark rate of return. In principle, the project financial benchmark rate of return (Ic) is the benchmark criterion for the project's financial internal rate of return indicator, and it is also the minimum requirement for the financial feasibility of the project, or a discount rate used to calculate the financial net present value. Therefore, whether the determination of the financial benchmark income is reasonable is crucial to the financial feasibility of the decision-making project. If the value is set too high, it may be possible to reject some financially reasonable projects with financial evaluations that are not feasible; on the other hand, if the value is set too low, some financially unviable items may be rejected The release of the project caused loss and waste of investment. The principle of establishing the financial benchmark rate of return is: if there is a benchmark rate of return for the industry issued by the industry, it will be used as the project's benchmark rate of return; if there is no industry regulation, it will be set by the project evaluator. Setting method: First, it is determined by referring to the average return level of the industry in a certain period and taking into account the risk factor of the project; second, it is determined by the cost of capital occupied by the project plus a certain risk factor. The basic principle of setting the current financial benchmark rate of return is proposed after fully considering the basic situation of the current Chinese socialist market economy, taking into account the diversity of financing channels for construction projects and the differences in the regional economic and environmental conditions of construction projects. The principles apply. At present, the reform of China's economic system is developing in depth. The reform of the investment system is also focusing on the fundamental role of the market in the allocation of resources. Many new situations and new features have emerged in the investment field. The investment scale in the investment field has increased year by year. In 2002, China s investment scale was RMB 406 billion, which was 44 times that of 1980. The main body of investment showed a diversified trend. At present, state-owned and non-state-owned economic investments are taking up a half of the country. Investment continues to strengthen, accounting for more than half of China's investment. The author believes that under the environmental conditions under which the reform of the investment system revolves around the fundamental role of the market in resource allocation, it is difficult for the industry to set a benchmark rate of return that can guide China's industry. Due to the market economic environment, competition among enterprises and commercial confidentiality It is also difficult for consultants and owners to obtain the financial benchmark income value of China, regional or major product manufacturers. Therefore, after taking financing costs as the basis and considering relevant factors, determining the project's financial benchmark rate of return will be a more effective method that is more suitable for the characteristics of the current investment system reform. The financial benchmark rate of return is the minimum requirement for the financial feasibility of the project. The minimum financially feasible requirements for different types of projects are different. For example, high-tech projects and urban infrastructure projects have very high expectations for financial benchmark rates Differently, generally speaking, the determination of the project's financial benchmark rate of return should take into account three factors: project financing costs, risk factors, and investors' minimum expectations for project benefits. In determining the financial benchmark rate of return, financing costs must first be considered. Financing cost refers to the expenses paid by the project for raising and using funds. When calculating the project financing cost, it can be calculated separately according to the specific financing plan of the project. For example: (a) Estimation of financing costs of debt funds. The financing cost of debt funds consists of fund raising fees and fund occupation fees. The fundraising fee refers to the one-time expenses paid during the fundraising process, such as commitment fees, handling fees, guarantee fees, agency fees, commissions, etc. The fund occupation fee refers to recurring expenses incurred during the use of funds, such as interest. (b) Calculation of bond financing costs. Bond financing refers to the way in which a project legal person raises funds through the issuance of corporate bonds based on its own financial status and credit conditions, and uses it as a financing method for project construction. Bond financing costs are mainly interest and financing costs of bonds. Financing costs mainly include bond printing fees, issuance fees, attorney fees, credit evaluation fees, notarization fees, guarantee fees, advertising fees, etc. Bond interest is the capital occupation fee. (c) Calculation of financing costs of own funds. Own funds refer to the cash that the project legal person can use for the project. The financing cost of this part of the funds should also be calculated. Generally speaking, the financing cost of this part of the fund should be calculated based on the opportunity cost of this part of the fund. When the opportunity cost is difficult to determine If it is not clear, it is recommended to calculate the financing cost of the self-owned funds according to the latest announced interest rate by the People's Bank of China. Often, the project financing channel is a combination of multiple financing methods. In order to reflect the funding cost of the entire financing scheme, based on the calculation of the financing costs of various financing methods, a weighted average funding cost is also calculated as the project financing cost. The basis for determining the project's financial benchmark rate of return. The minimum expected value of risk factors and benefits can be determined according to the project situation. Based on the above viewpoints, the recommended determination principles are as follows: (a) For large-scale energy transportation that focuses on national inputs to meet the needs of the entire national economic development and has significant social benefits , Infrastructure, social welfare projects, you can only consider the financing cost of the project, and use the financing cost of the project as the basis for determining the project's financial benchmark rate of return. For the above non-state investment-based public welfare projects that are invested in other forms should be determined by adding a certain risk factor to the financing cost. It is recommended that the risk factor be 1 to 2 percentage points. (b) For general items that provide products to the market, all three factors must be included in determining the financial benchmark rate of return. The risk factor and the minimum expected value are expressed in percentage points. It is recommended that the risk factor be 1 to 2 percentage points and the minimum benefit expected value be 2 to 5 percentage points. (c) For high-tech product projects with high technological content and strong product competitiveness, the expected value of benefits should be increased on the basis of general product projects, taking 5 to 10 percentage points. (d) Special projects should be determined based on specific project conditions.

Parity loan yield:

Parity loans are the coupon rates on newly issued bonds at a par value of 100. The parity loan curve derived from the fitted term structure can not only be compared with the market loan curve, but also be used as a guide for new debt issuance, that is, if the new government bonds are issued according to the current market loan, the parity loan of the corresponding term is Equal to its coupon rate.

Regarding the calculation of accrued interest, according to the relevant documents, the daily counting basis for all bond varieties on the interbank bond market, due loans or money market loans, is based on the "actual days / 365" method, that is, 365 days in a year. January is calculated based on the actual number of days. The number of interest-calculated days refers to the actual number of calendar days from the date of interest payment to the date of settlement.

Derivation of equal principal and interest repayment formula

Suppose the total loan is A, the monthly bank interest rate is , the total number of periods is m (months), and the monthly repayment amount is set to X. The bank loan owed in each month is:

First month A

Second month A (1 + ) -X

The third month (A (1 + ) -X) (1 + ) -X = A (1 + ) 2-X [1+ (1 + )]

The fourth month ((A (1 + ) -X) (1 + ) -X) (1 + ) -X = A (1 + ) 3-X [1+ (1 + ) + ( 1 + ) 2]

It can be obtained that the bank loan owed after the nth month is

A (1 + ) n -X [1+ (1 + ) + (1 + ) 2 + ... + (1 + ) n-1] = A (1 + ) n -X [(1+ ) n-1] /

Because the total number of repayment periods is m, that is, all the bank loans have been repaid in the m-th month, so there are

A (1 + ) m -X [(1 + ) m-1] / = 0

X = A (1 + ) m / [(1 + ) m-1]

About A (1 + ) n -X [1+ (1 + ) + (1 + ) 2 + ... + (1 + ) n-1] = A (1 + ) n -X [( The derivation of 1 + ) n-1] / uses the sum formula of the proportional series

1, (1 + ), (1 + ) 2, ..., (1 + ) n-1 are proportional series

On some properties of the proportional series

(1) Proportional sequence: An + 1 / An = q, n is a natural number.

(2) General term formula: An = A1 * q ^ (n-1);

Generalization: An = Am · q ^ (nm);

(3) Sum formula: Sn = nA1 (q = 1)

Sn = [A1 (1-q ^ n)] / (1-q)

(4) Nature:

If m, n, p, q N, and m + n = p + q, then am · an = ap * aq;

In the proportional series, the sum of each k terms in turn still constitutes the proportional series.

(5) "G is the median of a and b" "G ^ 2 = ab (G 0)".

(6) In the proportional series, the first term A1 and the common ratio q are not zero.

So 1+ (1 + ) + (1 + ) 2 + ... + (1 + ) n-1 = [(1 + ) n-1] /

Equal principal repayment

Q: What does equal principal repayment mean? Is equal principal repayment more economical than equal repayment?

Answer: The formula for calculating the equal principal repayment method is as follows: Monthly repayment amount = P / (n × 12) + total remaining borrowing × I, where P is the principal of the loan, I is the monthly interest rate, and n is the term of the loan. You cannot simply compare the two repayment methods.

Calculation formula for equal repayment

Monthly principal and interest payment amount = (principal × monthly interest rate × (1 + monthly interest rate) ^ months of loan) ÷ [(1 + monthly interest rate) ^ months of repayment-1]

Of which: monthly interest = remaining principal × monthly loan interest rate

Monthly principal = monthly monthly contributions-monthly interest

Calculation principle: From the monthly monthly contributions, the bank collects the remaining principal interest first, and then receives the principal; interest is paid monthly

The proportion of the capital decreases with the decrease of the remaining principal, so the proportion of the principal in the monthly contributions increases, but the monthly contributions

The total amount remains the same.

Declining monthly repayment calculation formula

Monthly principal and interest payment amount = (principal / months of repayment) + (principal-accumulated principal repaid) × monthly interest rate

Monthly principal amount = total principal amount / repayment months

Monthly interest = (principal-accumulated principal repaid) × monthly interest rate

Calculation principle: The principal amount returned every month is always the same, and the interest decreases as the remaining principal decreases.