To evaluate a prepayment decision,you need to know your investment rate in addition to the amount of interest saved by prepayment.

Question

Quizplus · Accepted Answer

To fully evaluate the financial impact of a prepayment decision, it is important to consider the investment rate you could earn on funds that would have been used for prepayment. This allows you to determine whether it is financially beneficial to use those funds for prepayment or to invest them elsewhere. Additionally, you need to calculate the amount of interest that would be saved by making the prepayment. Combined, these factors will help you determine whether a prepayment is a wise financial decision for you.

To Evaluate a Prepayment Decision,you Need to Know Your Investment