listsbsome of the pros and cons of retiring debt early

Expert Solution

1) Ans )The act of paying off a debt completely. If one borrows a certain amount, one must eventually repay it to the lender and retire the debt.
debt retirement - Investment & Finance Definition The act of repaying debt. This may be accomplished by recalling notes and bonds that have been issued and returning the principal to those who have purchased the debt. Often debt is retired by creating a sinking fund when the debt is issued.

advantages of retiring debt early:

✓Save on interst cost
✓Save on monthly EMI further we can invest that EMI somewhere and earn an interest
✓Reductions in debt to credit ratio:it will also help in getting loans in future by improving credit scores.

Disadvantages of retiring debt early:

✓A bullet cash outflow will reduce the cash
assest we had.it will impact our ability to buy
That is not loanable

✓for retiring debit we may have to sell out some assest in wherein we are earning a higher return

Could you please thumb up if answer was helpful ? thank you

Nightingale answered 2 years ago

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