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People often confuse personal consumption items with investments, thinking, for example, which the car a investment. A $22,000 kitchen remodeling project isn’t a wise investment either, if future buyers will just pay $10,000 more for dwelling afterwards. The owner might like to think it added $30,000 in value, but his ideas are irrelevant. He better enjoy that new stove and cupboards, because they were not investments, but a $12,000 personal purchase (that’s his net loss).
But many of us pay back our loan, we do not simply repay the $20,000 people today borrowed. Excellent artwork i just repay the $20,000 plus interest. The reason why we pay interest and how do you determine the amount of interest to pay for?
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