I am an entrepreneurial attorney in the Seattle area dedicated to helping clients build and plan for the future. I graduated from the University of Chicago with a law degree and worked at a leading global law firm. But I found it much more rewarding to advise real people on legal matters. Contact us to discuss how we can work together! Prorated calculations are also used to determine the amount of interest earned on an investment. When an investment earns an annual interest rate, the prorated amount earned for a shorter period is calculated by dividing the total amount of interest by the number of months in a year and multiplying it by the number of months in the shortened period. The amount of interest income in two months for an investment that earns 10% interest each year is (10% / 12) x 2 = 1.67%. In insurance, the pro-rata is used to determine the risk based on the timing of the insurance policy. It can also be used to describe proportionate liability when more than one person is responsible for a loss or accident. Let`s say an auto insurance policy that typically covers an entire year has a premium of $1,000.
If the insured only needs the policy for 270 days, the company must reduce the premium accordingly. The prorated premium for this period is ($1,000 / $365) x 270 = $739.73. A lack of bad manners, as well as a good sense of humor 🙂 In the case of bonds, the accrued interest payment is calculated on a pro rata basis. Accrued interest is the total interest accrued since the last coupon payment of a bond. If the bondholder sells the bond before the next coupon date, they are still entitled to accrued interest until the bond is sold. The bond buyer, not the issuer, is responsible for paying the bond seller the accrued interest, which is added to the market price. The prorata has a Latin etymology, calculated from pro, to, for, or from and rata, female ablative of (rate or change). Under UK employment law, “the regulations stipulate that, where appropriate, the pro rata principle applies to any regulation. To give. Holiday. In corporate practice, “a pro-rata dividend means that each shareholder receives an equal share for each share he owns.” A pro-rata clause in an automobile insurance policy provides that if an insured person has other insurance policies for the same type of risk, the policy-issuing company with the prorated clause will only be liable for a portion of the damage resulting from the ratio between its insurance limit and the total limits of all available insurance. If something is issued proportionally to people, it means allocating an amount to a person based on their share of the whole. Although a prorated calculation can be used to determine the corresponding parts of a given set, it is often used in corporate finance.
An employee`s part-time work, overtime pay and vacation are generally prorated. (proh rat-ah or proh ray-tah) adj. from the Latin for “in proportion”, which refers to a share or amount to be paid depending on the fraction of ownership, responsibility or time spent. Examples: An heir who receives a quarter of an estate may be liable for a quarter of the inheritance tax as a proportionate share. The buyer of a rental property pays his proportionate share of the property tax for the part of the year in which he holds the property. Irish secondary school teachers are entitled to a pro rata salary for part-time work. Suppose there are only four shareholders holding 50, 25, 15 and 10 shares respectively. The amount due to each shareholder is his proportional share. This is calculated by dividing each person`s ownership by the total number of shares and then multiplying the resulting fraction by the total amount of the dividend payment.
The American Federation of Teachers (AFT), an American union, argues that all part-time teachers or teachers should be paid pro-rated to teach college courses. This is an important topic for part-time speakers starting in 2010. Under U.S. federal regulations, a government employee has the right that “if an employee`s service is interrupted by a period of pay without vacation, the leave is earned on a pro rata basis for each period of partial pay that occurs in the continuity of employment.” Prorata is an adverb or adjective, i.e. proportional.
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