Reflator inc Dec 2005

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August 29, 2017 at 3:50 pm #404086
parisnaaa
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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
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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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