STEP 0: Pre-Calculation Summary
Formula Used
Add on Rate = ((Year/Days)*((Amount Paid at Maturity Including Interest)-Present Value of Money Market Instrument)/(Amount Paid at Maturity Including Interest))
AOR = ((YR/d)*((APMI)-PV)/(APMI))
This formula uses 5 Variables
Variables Used
Add on Rate - Add on Rate refers to a method of calculating interest on a loan or investment where the interest is computed on the entire principal amount for the entire loan term, and then added to the principal.
Year - Year is 12 months used by companies and governments for accounting purposes and preparing financial statements.
Days - Days refers to the number of days between settlement and maturity.
Amount Paid at Maturity Including Interest - Amount Paid at Maturity Including Interest refers to the total sum that an investor receives when a financial instrument reaches its maturity date.
Present Value of Money Market Instrument - Present Value of Money Market Instrument refers to the current worth of a financial instrument that will pay a specified amount at maturity, discounted at a given interest rate.
STEP 1: Convert Input(s) to Base Unit
Year: 7 --> No Conversion Required
Days: 15 --> No Conversion Required
Amount Paid at Maturity Including Interest: 210 --> No Conversion Required
Present Value of Money Market Instrument: 35 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
AOR = ((YR/d)*((APMI)-PV)/(APMI)) --> ((7/15)*((210)-35)/(210))
Evaluating ... ...
AOR = 0.388888888888889
STEP 3: Convert Result to Output's Unit
0.388888888888889 --> No Conversion Required
0.388888888888889 0.388889 <-- Add on Rate
(Calculation completed in 00.004 seconds)
You are here -
Home »

## Credits

Created by Aashna
IGNOU (IGNOU), India
Aashna has created this Calculator and 100+ more calculators!
Verified by Keerthika Bathula
Keerthika Bathula has verified this Calculator and 50+ more calculators!

## < 18 Strategic Financial Management Calculators

Money Market Discount Rate
Money Market Discount Rate = (Year/Days of Maturity)*(Face Value of Money Market Instrument-Present Value of Money Market Instrument)/Face Value of Money Market Instrument
Effective Convexity
Effective Convexity = (Price of Bond When Yield is Decreased+Price of Bond When Yield is Increased-(2*Initial Price of Bond))/((Change in Curve)^2*Initial Price of Bond)
Add on Rate = ((Year/Days)*((Amount Paid at Maturity Including Interest)-Present Value of Money Market Instrument)/(Amount Paid at Maturity Including Interest))
Change in Price of Full Bond
Percentage Change in Price of Bond = (-Annual Modified Duration*Change in Yield)+(1/2*Annual Convexity*(Change in Yield)^2)
Value of Right using New Shares
Value of Right = Number of New Shares*(Market Price-Issue Price of New Share)/Total Number of All Shares
Single Month Mortality
Single Month Morality = Prepayment for a Month/(Beginning Mortgage Balance for Month-Scheduled Principal Repayment for Month)
Value of Right
Value of Right per Share = (Stock Price-Right Subscription Price)/Number of Rights to Buy a Share
Cost of Equity
Cost of Equity = ((Dividend in Next Period/Current Share Price)+(Dividend Growth Rate*0.01))*100
Unlevered Beta
Unlevered Beta = Levered Beta/(1+((1-Tax Rate)*(Debt/Equity)))
Levered Beta
Levered Beta = Unlevered Beta*(1+((1-Tax Rate)*(Debt/Equity)))
Price Value of Basis Point
Price Value of Basis Point = (Price of Bond When Yield is Decreased-Price of Bond When Yield is Increased)/2
Price of Bond
Price of Bond = Face Value*(1+Implied Discount Rate)^Holding Period
Approximate Macaulay Duration
Approximate Macaulay Duration = Approximate Modified Duration*(1+Rate of Interest)
Conversion Parity Price
Conversion Parity Price = Value of Convertible Security/Conversion Ratio
Share Exchange Ratio
Exchange Ratio = Offer Price for Target's Share/Acquirer's Share Price
Earnings Yield
Earnings Yield = (Earnings per Share/Market Price per Share)*100
Dividend Rate
Dividend Rate = (Dividend per Share/Current Share Price)*100
Earnings Yield using PE Ratio
Earnings Yield = (1/Price-Earnings (PE) Ratio)*100

Add on Rate = ((Year/Days)*((Amount Paid at Maturity Including Interest)-Present Value of Money Market Instrument)/(Amount Paid at Maturity Including Interest))
AOR = ((YR/d)*((APMI)-PV)/(APMI))

## What is Add on Rate?

Add on Rate in finance provides a simple way to calculate the total interest on a loan by adding the interest to the principal and then determining periodic payments. While easy to understand, it often results in a higher effective interest rate compared to other methods, as interest is computed on the entire principal for the duration of the loan. Understanding how the add-on rate works is crucial for borrowers to make informed financial decisions. The add-on rate can result in a higher effective interest rate compared to other methods, such as amortized loans because interest is calculated on the full principal for the entire term.

## How to Calculate Add on Rate?

Add on Rate calculator uses Add on Rate = ((Year/Days)*((Amount Paid at Maturity Including Interest)-Present Value of Money Market Instrument)/(Amount Paid at Maturity Including Interest)) to calculate the Add on Rate, Add on Rate calculates interest based on the initial principal for the full term of the loan or investment, rather than on the remaining balance as it reduces over time. Add on Rate is denoted by AOR symbol.

How to calculate Add on Rate using this online calculator? To use this online calculator for Add on Rate, enter Year (YR), Days (d), Amount Paid at Maturity Including Interest (APMI) & Present Value of Money Market Instrument (PV) and hit the calculate button. Here is how the Add on Rate calculation can be explained with given input values -> 0.388889 = ((7/15)*((210)-35)/(210)).