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Return on investment is a percentage determination of how much profit you earn from any given investment. For Prosper.com users, you can also project your year end ROI using the formula below and the Prosper.com website, to do this take the following steps:

((Daily Interest Accrual x 365) / Total Account Value) x 100

Below you can see were to get these figures in red.

Multiply your daily interest accrual by 365 days in the year, then divide it by the the total account value and then multiply that result by 100. This will give you projection of your ROI for the year. If we plugged some real numbers into this formula, we would see:

(3.00 x 365 / 5000)*100 = 21.9, or a 21.9% ROI.

So if you are earning $3 in daily interest and have $5,000 invested in Prosper, your return will be 21.9%

To determine your own ROI, log in to your Prosper account, navigate to “Your Account”, then “Lending”, then plug the following 2 numbers into the formula above:

To find “Daily Interest Accrual”, use this value:

To find “Total Account Value” use this value:


This gives you a current projection of ROI, not your current or actual, meaning what you have actually earned as of the moment you perform this calculation projected for the rest of the year. It’s also possible to calculate your current ROI by using this calculation.

2 comments:

At January 9, 2008 at 7:10 AM Anonymous said...

You may want to consider the fact that as loans are repaid, the amount of interest will decrease.

 
At January 18, 2008 at 11:46 AM Anonymous said...

You may want to consider the fact that each loan has an X% chance of defaulting.

 

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