Factor Rate Calculator

Formula

The formula to calculate the Factor Rate is:

\[ \text{FR} = \frac{\text{P}}{\text{A}} \]

Where:

$\text{FR}$ is the Factor Rate
$\text{P}$ is the Total Payback Amount
$\text{A}$ is the Advance Amount

What is a Factor Rate?

A Factor Rate (FR) is used to determine the cost of a loan or advance. It is calculated by dividing the total payback amount by the advance amount. This rate helps in understanding the overall cost of borrowing.

Example Calculation

Let's consider an example:

Total Payback Amount (P): $15,000
Advance Amount (A): $10,000

Using the formula to calculate the Factor Rate:

\[ \text{FR} = \frac{15,000}{10,000} = 1.5 \]

This means that the Factor Rate (FR) is 1.5.