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Tyche will repay the 3m$ of the outstanding loan at the end of each of the next 5 years from the cash flows generated from its business activity.
So would it affect the PnL or Retained earnings cz its actually a cash transaction ?
No, the repayment will not directly affect either the Statement of profit or loss, or the retained earnings.
(except, of course, that the interest payable will reduce each year)“Co will repay £3m of the outstanding loan at the end of the year”
The outstanding loan at the end of the year should include the interest charge for the year?
If this is so, then the balance at end of year 1 (65+5.85-3) 67.85 and the interest charge for year 2 (9%) = 6.11The question says that interest is payable at the end of each year, so it is therefore not added to the balance owing.
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