Example:

Installment Cost-recovery
1 2 1 2 total
revenue 8000 12000 10000 10000 20000
expense 4000 6000 0 10000 10000

profit 4000 6000 10000 0

year balance jan.1 interest revenue payment reduction in principle balance dec.31
2010 74606 7460 30000 22540 52066
2011 52066 5207 30000 24793 27273
2012 27273 2727 30000 27273 0

a, Completed - contract method

2010 2011 2012 total

revenue 0 0 120 120
expense 0 0 100 100

profit 0 0 20 20

b, Percentage of Completion

2010 2011 2012 total

revenue 12 72 36 120
expense 10 60 30 100

profit 2 12 6 20

c, Installment

Year Revenue Expense Profit

2010 sale 52540 40793 11747
interest 7460 8122 -662

2011 sale 24793 19249 5544

interest 5207 7934 -2727

2012 sale 27273 21175 6098

interest 2727 2727 0

total 20000
year balance jan.1 interest revenue payment reduction in principle balance dec.31
2010 81217 8122 10000 1878 79339
2011 79339 7934 60000 2066 27273
2012 27273 2727 30000 27273 0

PV of cash receipts 104606

PV of cash payment 81217
rate 0.77640861901