I have this question that’s been bothering me. Let’s keep it simple. A building costs $100 to build. The bank says they will fund 100% of these construction costs. Additionally, the interest to be paid on this money is estimated at $5. The question is, why would the bank offer to fund $105 for this project, thus funding the interest that the borrower would have otherwise given to the bank out-of-pocket? Ignoring all else (fees collected, etc.), how does the Bank make money funding their own interest payments?
January 13, 2020 at 05:29PM