Documente Academic
Documente Profesional
Documente Cultură
Principal Amount xx
Less: Origination fee received (xx)
Effective interest rate using interpolation
Add: Direct origination cost xx
Initial Present Value or CA xxx
X = Lower Rate + [HR – LR] x
Subsequent Measurement
amortized cost using effective interest
rate method
** since LR frequently involves
transaction costs, a new effective rate
should be computed through
interpolation
GOLDEN RULE
“the higher the interest rate, the lower
the present value”