1. An installment loan is repaid a. in a single payment after a specified period of time. b. in equal payments over a specified period of time. 2. The amount of an installment loan depends on a. the amount financed, the number of payments, and the arunual percentage rate. b. whether the borrower can afford to make a down payment. 3. With each monthly payment on an installment loan, the amount you owe to principal a. decreases.
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- (Note, this is how mortgage payments are calculated.) Payments on a loan are amortized when a fixed amount is paid at the end of each time period in order to pay off both the principle of the loan and the interest accumulated up to that point. At the end of each period, interest is charged on the amount still owing. Let P be the initial amount of the loan, and i > 0 be the interest rate charged (per period), R the size of the per period payment (paid at the end of each period), and Pt the amount that is still owed after t periods. So P0 = P(a) Find P1.(b) Find a first order linear recurrence for Pt.(c) Show that the solution to your recurrence relation isPt = (P-(R/i))(1+i)^t + (R/i)1. In a loan amortization schedule, interest payments for each period would most probably a. Increase overtime c. Remain the same b. Decrease overtime d. There are no interest payments in the schedule 2. The formula (1 + i)n is also called a. present value factor for lump-sum payment b. future value factor for lump-sum payment c. present value factor for ordinary annuity d. future value factor for ordinary annuity 3. An increase in the present value may be caused by a. increase in the discount rate b. decrease in the discount rate c. discount rate does not affect the present value d. none of the above 4. Interest payments that are based on the original principal and previous interest recognized is based on a. present value c. simple interest rate b. future value d. compound interest rate 5. The time value of money suggest that a peso received today is worth a peso received in the future. a. less than c. the same as b. more than d. none of the aboveWhich of the following refers to the ratio of the interest to the principal repayment on an annual unpaid loan? A. it increases as the loan gets older О в. it decreases as the loan gets older O c. it remains constant over the life of the loan O D. it changes according to the level of market interest rates during the life of the loan
- Which one of the following statements about a fixed-rate mortgage (FRM) loan is correct? a. The monthly payment of the FRM loan changes over the life of the loan. b. Each monthly payment contains the interest payment component and principal repayment component. The size of each component remains unchanged over the life of the FRM loan. c. Each monthly payment contains the interest payment component and principal repayment component. As time goes by, the size of the interest component increases and the size of the principal component decreases, but the sum of the two components remain unchanged. d. Each monthly payment contains the interest payment component and principal repayment component. As time goes by, the size of the interest component decreases and size of the principal component increases, but the sum of the two components remain unchanged.To compute for the annual interest payments of a loan, the principal amount is multiplied by: a. Market rate b. Nominal rate c. Amortized rate d. Effective rateOver the life of a fixed payment amortized loan, such as a conventional mortgage, the proportion of the payment that goes to repay principal A : increases each month. B : varies with economic conditions. C : decreases each month. D : stays constant over time.
- From page 9-1 of the VLN, every installment payment Group of answer choices A. Reduces the amount you owe on the loan by the total amount of the payment. B. Reduces the amount you owe on the loan by the amount of interest that has accrued since your last payment. C. Reduces the amount you owe on the loan by the difference between the payment and the interest that has accrued since your last payment. D. Causes the amount of interest accrued to be more than the last installment payment.Choose the best answer from the choices provided. As a loan is paid off, the monthly payment increases debt and interest portions do not change each interest period interest potion of the fixed payment increases debt portion of the fixed payment increasesBased upon the simple interest rate method of a fixed interest rate installment loan or mortgage, successive monthly loan payments over time a. pay the same percentage to interest and principal. b. pay increasing percentages to interest and decreasing percentages to principal. c. pay increasing percentages to principal and decreasing percentages to interest. d. pay decreasing percentages to interest and principal.
- what is the total amount of monthly payments made at the end of the loan termConsider a home mortgage of $ at a fixed APR of % for years. a. Calculate the monthly payment. b. Determine the total amount paid over the term of the loan. c. Of the total amount paid, what percentage is paid toward the principal and what percentage is paid for interest.pls refer to the image attached, 1. suppose that you have the capacity to pay, would you rather borrow a loan that is amortized monthly, or one that is amortized quarterly? 2. what is your considerations when availing a loan? (quantitative or qualitative considerations) Discuss.