Calculate merchant cash advance payback, payment size, or factor rate from advance amount, total payback, and term length inputs.
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Factor Rate Formula
The following two example problems outline the steps and information needed to calculate the Factor Rate.
FR = P / A
- Where FR is the Factor Rate
- P is the total payback amount ($)
- A is the advance amount ($)
To calculate the factor rate, divide the payback amount by the advance amount.
How to Calculate Factor Rate?
The following example problems outline how to calculate Factor Rate.
Example Problem #1:
- First, determine the total payback amount ($).
- The total payback amount ($) is given as: 130,000.
- Next, determine the advance amount ($).
- The advance amount ($) is provided as: 100,000.
- Finally, calculate the Factor Rate using the equation above:
FR = P / A
The values provided above are inserted into the equation below and computed.
FR = 130,000 / 100,000 = 1.30
Example Problem #2:
For this problem, the variables required are provided below:
total payback amount ($) = 96,000
advance amount ($) = 80,000
Test your knowledge using the equation and check your answer with the calculator.
FR = P / A = ? (Answer: 96,000 / 80,000 = 1.20)
