AECN 201 Lecture Notes - Lecture 5: Annual Percentage Rate, Accrual, Business Analysis
Document Summary
Principle: the amount borrowed or the amount due. Down payment: amount the borrower is placing to purchase whatever the asset is. Interest rate: the rate at which interest will accrue (apr: annual percentage rate) Repayment schedule: often the same as the term. Amortization: telling how the interests and principle is paid back. Fully amortizing: term/repayment schedule are the same) Mortgage: a legal thing that ties the loan to the real estate. Refinance: refinancing means there is probably borrowed; have one loan but don"t like the terms of current loan so get a new one. Example: farmer borrows ,000 to buy a property at a price of ,000,000. More time to pay back --> smaller payments. Percentage rates can greatly effect how much has to be paid back even if they are small. Skin in the game: having something to lose (down payment or collateral) Hope value of land has gone up.
