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Reflator inc Dec 2005

This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

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August 29, 2017 at 3:50 pm #404086
parisnaaa
Member
- Topics: 32
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Hi John. The question says that 8.5% loan is repayable as a bullet payment at the end of 8 years. So why do we deduct the interest payable of $170000 annually in our workings.?
August 29, 2017 at 4:51 pm #404113
John Moffat
Keymaster
- Topics: 57
- Replies: 54835
If you take a loan then you always have to pay interest each year. Then at the end of the relevant period you have to repay the principal. The question specifically refers to the ‘bullet payment’ as being a repayment of the principal.
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