london-journal-of-research-in-management-and-business London Journal of Research in Management and Business 2633-2299 2633-2302 JournalsPress 95454 Multiple Contracts with Simple Interest: The System of Constant Amortization 23 8

Repeatedly, the Brazilian Judicial System has determined that home-financing contracts written in terms of compound interest, both in the case of constant payments and in the case of the system of constant amortization, should be substituted by contracts specifying simple interest. This has resulted, for the case of the system of constant mortization, in the adoption of a variant of a procedure that has been named the “Gauss’ Method”. It is shown that the implementation of a multiple contracts’ version may imply substantial fiscal gains, depending on the financial institution opportunity cost.

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Repeatedly, the Brazilian Judicial System has determined that home-financing contracts written in terms of compound interest, both in the case of constant payments and in the case of the system of constant amortization, should be substituted by contracts specifying simple interest. This has resulted, for the case of the system of constant mortization, in the adoption of a variant of a procedure that has been named the “Gauss’ Method”. It is shown that the implementation of a multiple contracts’ version may imply substantial fiscal gains, depending on the financial institution opportunity cost.