Loans with constant annuity: interest and repayment, in loan agreements the term “amortization plus saved interest”. A fixed rate loan is not to be confused with a fixed rate loan. The principal repayment of the loan is continuously reduced by the repayment portion. What do I do if I want to choose higher or lower redemption from the beginning?
The third edition is dedicated to current circumstances and takes into account the recent legislative and organizational circumstances resulting from extensive legislative initiatives. These include, among others, the changes in the environment of the entrepreneurial companies (Mini or 1-Euro-GmbH) and the European Company (Europa AG) on the stock corporation law side. In tax law, the most recent amendments to the German Accounting Law (BilMoG) have been implemented.
In addition, against the background of the current financial market crisis, new financial instruments such as Structured Floaters, asset-backed securities and asset-backed commercial paper. Based on the many multiple-choice questions and questions that served the self-examination and exam preparation, these were prepared by 50.
Basic Principles of Corporate Finance
It is aimed at students of business administration and practice. It gives an insight into the fundamentals of corporate finance. The texts are written in didactic form and contain many overview and sample images for a better understanding. In the fifth edition, it has been completely redesigned and expanded with important components.
1% repayment: Not the right decision for investors
As part of real estate financing, a repayment of only one percentage point is very often decided. The reason is always the same: The duration of the financing (and thus the repayment) is of little importance, since interest can be deducted from the VAT. At the same time, it does not seem very meaningful to fully tax rental income.
Why a quick and thus higher repayment is more profitable, the following example shows. The monthly rental income amounts to 500 EUR. With a tax rate of 50 percentage points, the investor is a top earner. The investors pay a monthly installment of 350 EUR. In the second variation, it is gratifying to see how much the interest rate loss has on the tax burden. The interest loss affects the tax burden.
Who repays his loans quickly, paid more money, but also more money. Anyone who still criticizes should pay attention to one thing: it is good to have the opportunity to lower taxes. All the more so, as the tax rate assumed in the example was 50 percentage points. Many investors have a lower tax share, which increases their returns even further when the residual debt of their loan falls off quickly.
The main criticism of the concept of increased eradication is the economic urge. It would be conceivable, for example, to decide only a first repayment of one percentage point. The investor is therefore still very flexible and can quickly repay his loan.