In claim valuation approach, I know how to calculate ineterst payment but I am not able to figure out where principal component comes from. I have not referred to CFAI books, perhaps they have better explanation but it’s definitely misssing in the schweser or my brain is too fried to do anything. Any help will be greatly appreciated.
"Cash flow to bondholders is equal to principal repayments (the change in liabilities from
the balance sheet} plus interest expense, as shown in the Figure 6."
Schweser Book 2, Study Session 8, Page 258 It is linked with the example on Page 257. In exam we might have to make the amortization schedule to get the principle part and the interest part.
How in the world did I miss it? And I tell you I spent at least half an hour on this and I still couldn’t figure out. Thanks!