The interest rates may be used with the
following formula to calculate interest for any period. The formula calculates the
interest factor which is then multiplied by the assessment amount to compute the interest
due.
 |
XX |
|
|
I
= Interest due
A
= Assessment amount
R = Annual interest rate
N = Number of days in the year
n
= Number of days (compounding periods) late |
For interest owed to MMS, calculate that interest
from the due date of the sales month to the date MMS received the payment. For interest
MMS owes you, calculate that interest from the due date of the sales month, without regard
to an extended due date because of an estimate, to the date MMS receives Form MMS-2014
recouping the overpayment. The overpayment interest rate is currently one percent less
than the underpayment interest rate. Both rates are compounded daily.
COMPOUNDED DAILY INTEREST FORMULA EXAMPLE
USING TWO INTEREST PERIODS
Interest Amount = Assessment amount x ((1 + Annual
interest rate/Days per year)
No. of days late - 1)
Calculate interest on $1,382.62 for 60 days
at 9%
$20.60 = $1,382.62 x ((1 +.09/365)60 -1)
|
Step 1: |
.09/365 = .0002465753 (rounded to 10 decimal places) |
|
Step 2: |
1 + .0002465753 = 1.0002465753 |
|
Step 3: |
1.000246575360 = 1.01490265027797 (rounded to 14 decimal places) |
|
Step 4: |
1.01490265027797 - 1 = .01490265027797 |
|
Step 5: |
$1,382.62 x.01490265027797 = $20.60 |
To calculate interest on $1,382.62
for 60 days at 9% and then 90 days at 11%,
follow Steps 1 through 5, then:
| Step 6: |
.11/365 = .0003013699 (rounded to 10 decimal places) |
| Step 7: |
1 + .0003013699 = 1.0003013699 |
| Step 8: |
1.000301369990 = 1.02749027376513 (rounded to 14 decimal places) |
| Step 9: |
1.02749027376513 - 1 = .02749027376513 |
| Step 10: |
$1,382.62 + $20.60 = $1,403.22 |
| Step 11: |
$1,403.22 x .02749027376513 = $38.57 |
Total interest due is $59.17 ($20.60
+ $38.57)
Please note that the $20.60 interest calculated at 9% is
added to the $1,382.62 assessment amount before multiplying by the 11% factor for the
subsequent interest period. The calculated interest for each period must be added to
the assessment amount and becomes the new assessment amount for each additional interest
period.
If you have interest calculation questions, please call
Financial Management Services at
1-800-433-9801. |
