Mortgages
Long-term loans for property purchase.
Formula
Monthly Repayment = [P × r(1+r)ⁿ] ÷ [(1+r)ⁿ−1]
Real World
When Costa Coffee expanded by purchasing high-street retail units, it used commercial mortgages secured against those properties, allowing it to preserve working capital while building long-term property assets.
Exam Focus
Stress that mortgages are secured loans — if the business defaults, the lender can repossess the property; this is a key risk to state.
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