Suppose I look at a 36 month loan for \$10,000 at 20%. Thus my payment per month is \$166.67. Thus my IRR should be 20% (on an annualized basis).

Now let's suppose I prepay my loan early at the end of 24 months. Doing the calculation, I still get the same IRR of 20%. Can someone confirm that this is in fact the case?

Thanks, Greg

  • $\begingroup$ This should migrate to mathematics or economics. $\endgroup$ – Dave Harris Jul 21 '17 at 6:06
  • $\begingroup$ You need to provide more information. When exactly are you calculating IRR? If principal is returned early, future interest payments may not be paid on that part of the principal. $\endgroup$ – jd8 Jul 21 '17 at 14:33

Yes, the IRR is the same regardless of the prepayment date. The only thing that varies is the life of the loan.

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