Loan with a lower present value


Question 1: Which is preferable, a loan with a lower present value or a loan with a lower periodic installment? Why?

Question 2: What would be preferable, to retire a loan towards the end of its term or much before it? Explain your answer.

Question 3: If a loan has a pre-payment penalty attached to it, would it still be viable to retire it? Why or why not?

Question 4: Is it better to retire all loans much before their term? Explain your answer.

Question 5: How much importance should be given to the fact that while the gains from the retirement of a loan can be estimated with certainty, the returns from an investment always carry a risk attached to them?

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Finance Basics: Loan with a lower present value
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