Amortizing a Loan with a Double-Pay Strategy

June 1990
American Business Review;Jun90, Vol. 8 Issue 2, p7
Academic Journal
A double-pay plan is a loan prepayment strategy whereby borrowers completely liquidate a debt obligation in half the contracted time by including with each regular annuity payment an amount equal to the principal scheduled to be repaid in the following period.
This paper has addressed such plans from the point of view of both the borrower and lender.
Because the future values of the single-pay and double-pay plans for n years at i percent are equal, the lender is not adversely affected and can even benefit from the accelerated recovery of capital if the funds become the source of new loans at higher rates.


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