Amortization System by Multiple Contracts: the French system fallacy
DOI:
https://doi.org/10.18836/2178-0587/ealr.v4n1p160-180Abstract
By using an arbitrage argument, this article shows that the interpretation of what interest and amortization are at the French system is a fallacy, because it assumes the outstanding balance is refinanced every period at the same rate. Henceforth, it is offered another amortization system that replicates the original cash flow, but with a new interpretation of what is interest or principal in each payment. Depending on the tax regime, this different interpretation may have substantial effects.Downloads
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Published
2013-08-19
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