Why isn’t interest deducted from the initial proceeds? Don’t they have to pay the interest? What’s the point they give you the interest rate then?
Maybe they are asking the initial net proceeds. Like the second part of this question, they even dont provide the lease rate. However, I subtract the interest from loan value too. I dont know how many credit could I get in the real exam…
They just want to know how much proceeds you will get at T=0, interest will be paid at period end (T=1) therefore not included.