WealthBoy, whom I met at Prosper Days, has just released The WealthBoy Strict ROI for Prosper Lenders – an open source, sql based ROI calculation for Prosper Lenders.  His calculation makes use of the public and private data files from Prosper.  He was inspired by his Prosper Blog post: The Rule of 72 on Prosper.

TotalROI = (Total Interest Received - Fees - Losses on Defaults) / (Total Loan Originations - Reinvested Loans) 

For RateLadder that equates to

Screen Name: RateLadder_com
Total Bid Count: 324
Total Reinvested Bids: 115
Total Originations (total amount loaned): $16,296.50
Total Investment (total amount loaned excluding reinvested bids): $10,500.92
Total Income (total principal and interest less fees): $6,067.12
Total Profit (total interest less fees and defaults): $1,138.48
Total ROI: 10.84%
Average Loan Age: 11.81 months
Annualized ROI: 11.02%

For the initial release he made no assumptions about the value of late loans. But… 

It is an open source, sql based ROI calculation for Prosper Lenders…  With the calculation being open source it is clear (assuming you can read through about 250 lines of SQL exactly how the calculation is performed…  As his sounding board during development I can confirm that WealthBoy put a lot of work into this project.  I think this is a great addition to the Prosper tools.

At the moment it takes about 45 seconds to perform the calculation for the largest lenders at ProProsper…  It will only take longer as more payments are made.  This performance issue is the main reason I have yet to implement it at ProProsper as it will take some back-end engineering on my part to calculate the values in an efficient way in terms of server resources. I expect to add it to ProProsper, but currently I am not able to find the time to do so…  Hopefully soon… Or maybe Eric or LendingStats can add it first…

Anyway, I encourage you to check it out.  Well Done WealthBoy!

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