Calculating investors payouts
Multiple investors can fund a loan. When a borrower repays, the investors of that loan are paid back. Payments are first made to the higher priority investors. If there are more than one investors on the same priority then the amount is split according to their share percentage.
Payout Formulas
If there is only one investor of a priority, the payouts are calculated as per the following formulas:
Principal share of the investor = (Investment Percentage of the investor/ Investment percentage of the investor) * remaining of the principal received
Note:Remaining of the principal received = principal received - principal paid out
Interest share of the investor = (Investment Percentage of the investor/ Investment percentage of the investor) * remaining of the interest received
Note:Remaining of the interest received = interest received - interest paid out
Payout to the investor = Minimum of (Principal share of the investor, Investment amount by the investor) + Minimum of (Interest share of the investor, Interest accrued on the amount invested by the investor)
If there are more than one investor of the same priority, the payouts are calculated as per the following formulas:
- Principal share of the investor = (Investment Percentage of the investor/ (total of investment percentage of all the investors of the same priority)) * remaining of the principal received
- Interest share of the investor = (Investment Percentage of the investor/ (total of investment percentage of all the investors of the same priority)) * interest received
- Payout to the investor = Minimum of (Principal share of the investor, Investment amount by the investor) + Minimum of (Interest share of the investor, Interest accrued on the amount invested by the investor)
Example
Loan Amount= 10000
90 % of this loan is funded by three investors with the investment details described in the following table:
| Investment Details | Investor 1 | Investor 2 | Investor 3 | Investor 4 |
|---|---|---|---|---|
| Investment Percentage | 20% | 10% | 30% | 30% |
| Investment Amount | 2000 | 1000 | 3000 | 3000 |
| Priority of the Investor | 2 | 1 | 2 | 3 |
Payout Priorities and Calculations
Let us assume that a payment of 7000 is received ( P = 2000, I = 5000). The following sections describe the payouts made to different investors and the calculations used to calculate the payouts.
Payout to Investor 2
- Investor 2 is at the highest priority so is paid out the first.
- Investment amount = 1000
- Let us assume the interest accrued = 200
- No principal payout has been made yet so the remaining of the principal received = 2000
- No interest payout has been made yet so the remaining of the interest received = 5000
Payout Calculations
- Principal share of investor 2 = (10/10) * 2000 = 2000
- Interest share of the investor 2 = (10/10) * 5000 = 5000
- Payout to the investor = Minimum of (2000, 1000) + Minimum of (5000, 200)
- So, the Payout made to the investor 2 = 1000 + 200 = 1200
Payout For Investor 1
- Investor 1 is at the next priority so is paid out after investor 2.
- Investor 1 and investor 3 are at the same priority so the payout is split between the two.
- Investment amount = 2000
- Remaining of the principal received = 2000 - 1000 = 1000
- Interest accrued = 400
- Remaining of the interest received = 5000 - 200 = 4800
Payout Calculations
- Principal share of investor 1 = (20/(20 +30)) * 1000 = 400
- Interest share of the investor 1 = (20/(20+30)) * 4800 = 1920
- Payout to the investor = Minimum of (400, 2000) + Minimum of (1920, 400) Payout made to the investor 1 = 400 + 400 = 800
Payout for Investor 3
- Investor 3 is at the next priority so is paid out after investor 2.
- Investor 1 and investor 3 are at the same priority so the payout is split between the two.
- Investment amount = 3000
- Remaining of the principal received = 2000 - 1000 = 1000
- Interest accrued = 600
- Remaining of the interest received = 5000 - 200 = 4800
Payout Calculations
- Principal share of investor 3 = (30/(20 +30)) * 1000 = 600
- Interest share of the investor 3 = (30/(20+30)) * 4800 = 2880
- Payout to the investor = Minimum of (600, 3000) + Minimum of (2880, 600) Payout made to the investor 3 = 600 + 600 = 1200
Payout for Investor 4
- Investor 4 is at the lowest priority so is paid out the last.
- Investment amount = 3000
- Interest accrued = 600
- Remaining of the principal received = 1000 - 600 = 400
- Remaining of the principal received = 4800 - 600 = 4200
Payout calculations
- Principal share of investor 4 = (30/30) * 400 = 400
- Interest share of the investor 4 = (30/30) * 4200 = 4200
- Payout to the investor = Minimum of (400, 3000) + Minimum of (600, 4200) Payout made to the investor 4 = 400 + 600 = 1000