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Principal payment

Payment that reduces debt and builds equity rather than being economically consumed.

01

Simple definition

Payment that reduces debt and builds equity rather than being economically consumed.

02

Why it matters

This term changes how inputs, cash flows or results should be interpreted. RATIOXA keeps it explicit so two options are compared on the same basis.

03

Worked example

Of a €1,700 payment, €900 may be interest cost and €800 wealth building.