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Hi John,
Good morning, last day to ask questions?
My question is, in Proteus co I thought the loan outstanding at the end of year one/beg of year two should have been:65,000+5,850-3,000=67,850
Or are they saying the payment of 3,000 is in advance?
I ask this because it’s seem exactly the same question as in Bento.Proteus is complete different from Bento.
In Proteus they are repaying 3,000 of the principal each year, and they are also paying the interest each year. (So the principal each year keeps falling and therefore the interest each year keeps falling.)
In Bento they are paying an equal amount each year which includes both the principle and the interest. That is why we need to divide by the annuity factor to get the equal payment each year.
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