Hi Anil
Thank you for your response
W have a loan to a client of 100 at 8% for 3 years. Every 3 month the client is suppose to pay us pay us back 5% of the 8% rate we charged them at that point of payment 3 % is capitalized.
start date 01/01/2014 book 55A nominal 100, interest rate 8%
on 01/04/2014 we receive payment of 5% of loan amount (5/100 x nominal of 100 x 90/360)and 3 % of interest rate (8%( is capitaised
At the same time we have an option to convert this loan to equity because its deep in the money meaning its a American option. so first challenge is to structure the interest condition in a way that I can see payment of 5% coming every 3 month but at the same point capitalize 3% so its partly capitalization not whole interest of 8% also note during the life of the loan client is allowed to pay any lump sum (unscheduled payment) trust its clear thanks
Victor