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FINANCIAL IMPLICATIONS OF THE “GAUSS METHOD”

By Clovis José Daudt Lyra Darrigue de Faro

Abstract

The Braziliam Judiciary has been determining that the popular system of constant payments, known as Tabela Price, based on compound interest, be substituted by an amortizacion scheme, named as “Method of Gauss”, with constant payments based on simple interest. Moreover, the substitution being done while maintaining the numerical value of the contractual interest rate. Taking into account that a possible defensive strategy which may be used by the financial institutions, is not always feasible, it is also shown that the use of the so called “Method of Gauss” will introduce unsurmountable difficulties concerning the determination of outstanding debts. Since the methodology that has been proposed for the determination of outstanding debts, does not agree with procedures that are well known in the pertinent literature

Topics: Debt Amortization, Gauss Method, Business, HF5001-6182, Finance, HG1-9999
Publisher: Universidade do Estado da Bahia
Year: 2016
OAI identifier: oai:doaj.org/article:a9def4610284459a8ce020ed97eca640
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