In computing debt servicing a number of methods are employed. Discuss the following methods used in computing debt servicing (i) Simple Interest (ii) Payment of equal amounts of Principal (iii) Equal Instalments

In computing debt servicing a number of methods are employed. Discuss the following methods used in computing debt servicing (i) Simple Interest (ii) Payment of equal amounts of Principal (iii) Equal Instalments

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter6: Building And Maintaining Good Credit

Section6.2: Three Ways To Set Your Own Debt Limit

Problem 1CC

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Concept explainers

Operating Cash Flows

A cash flow statement (CFS) helps the company to know the amount of cash at its disposal, the activities that lead to earning cash, and the activities which require cash expenditure for a particular period. The statement represents the liquidity of the company.

Question

In computing debt servicing a number of methods are employed. Discuss the following methods used in computing debt servicing

(i) Simple Interest

(ii) Payment of equal amounts of Principal

(iii) Equal Instalments

(iv) Equal instalments with interest capitalized

(v) Declining real burden of debt servicing

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