Question #22970

A $50,000 loan is to be amortized over 7 years, with annual end-of-year payments. Which of

these statements is CORRECT?

a. The annual payments would be larger if the interest rate were lower.

b. If the loan were amortized over 10 years rather than 7 years, and if the interest rate

were the same in either case, the first payment would include more dollars of interest

under the 7-year amortization plan.

c. The proportion of each payment that represents interest as opposed to repayment of

principal would be lower if the interest rate were lower.

d. The last payment would have a higher proportion of interest than the first payment. e.

The proportion of interest versus principal repayment would be the same for each of

the 7 payments.

these statements is CORRECT?

a. The annual payments would be larger if the interest rate were lower.

b. If the loan were amortized over 10 years rather than 7 years, and if the interest rate

were the same in either case, the first payment would include more dollars of interest

under the 7-year amortization plan.

c. The proportion of each payment that represents interest as opposed to repayment of

principal would be lower if the interest rate were lower.

d. The last payment would have a higher proportion of interest than the first payment. e.

The proportion of interest versus principal repayment would be the same for each of

the 7 payments.

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