Say someone decides to refinance a loan that has $100,000 worth of principal and $25,000 worth of accrued interest. He includes the $25,000 in the amount being refianced, so that it's now a $125,000 loan. Is this accrued interest considered to be paid? Is it now part of the principal?

I would say yes, the accrued interest would be a part of the principal as far as the new loan is considered.

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