Introduction to Accounting for Debt - - Accounting for Financial Modeling

[@mikeshcherbakov4077]

Thanks for the video! You assumed that you calculate interest expense based on the debt’s opening balance. So, why do you pay 10 as interest expense in year 1 while the opening balance is 0. It looks like you need to pay 0 as interest expense in year 1. That’s exactly what you do in following years. Why do you change the scheme in year 1?

[@financialmodeling1899]

Hi, because as per instructions, we draw on debt at the beginning of the year, so we have to pay interest on the debt drawn.