There have been many arguments Concerning the reduction of the mutual fund loan interest rate since a communique to that effect was made public.
Per analysis mad by some associate teachers, the reduction claimed by the Ghana National Association of Teachers (GNAT) is a hoax and a deception to its members.
But are the analysis made by the union members accurate?
Well, let’s enlighten ourselves with this piece:
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You cannot base on this to discredit the interest charge by a union as false.
If you decide to go that direction maybe you will be exhibiting ignorance in Finance and Accounting.
There are two methods of calculating interests charged on loans.
The straight line method and the reducing balance method. 12% straight line interest charge is not the same as 12% reducing balance.
Infact at the same rate the reducing balance repayment is lesser than the straight ling repayment.
You may even have a 16% reducing balance method rate and you will pay lesser than a 12% straight line method.
What the teacher always need to ask beyond the rates is to know which method of interest calculation is put on the loan before you talk about the feasibility of the repayment
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