Thoughts on paying down loans

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Thread: Thoughts on paying down loans

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10-07-2008, 04:37 PM

#15 (permalink)

ashwright

Member

Posts: 67

Join Date: Nov 2007

Location: Brisbane, Qld

Quote:

Originally Posted by Waimate01

Net worth of (say) $7m, no debt, earning (say) 5% fully franked means an effortless income of $350k per year with a bunch of the tax already paid.

But if you have a Net worth of $7m, debt of $14m, earning 5%, with interest costs of 10%. Your equity is the same, your assets are $21m. However instead of earning money, you are losing $350k per year.

I think it is all about cash flow, not net worth.

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