If you’ve been using Excel to build financial models for any period of time, you’ve probably come across the issue of circular references in debt calculations. Here are a couple of ways of dealing with them:
1. Get around it mathematically e.g. create a working line (not always possible or accurate)
2. Calculate interest on prior period balance (not very accurate)
3. Hard-code interest amount and create macro to recalculate
4. Enable iterative calculations
Circularity in Debt Calculations is covered in detail in the FMI Level 1 Exam Prep Online training course: https://plumsolutions.com.au/courses/fmi-level-1-exam-preparation/
