$150,000 Loan Is to Be Amortized Over 7 Years, with Annual

question 161

Multiple Choice

$150,000 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 higher if the interest rate were lower.
• D)The proportion of each payment that represents interest versus repayment of principal would be higher if the interest rate were higher.
• E)The proportion of interest versus principal repayment would be the same for each of the 7 payments.

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Definitions:

Self-reward

A process of giving oneself a reward to reinforce and encourage positive behavior or the completion of tasks.

Study Habits

Consistent practices or routines that individuals adopt to enhance their learning and understanding of materials, improving their educational outcomes.

Functionalism

A school of thought in psychology that emphasizes the role of mental processes in how individuals adapt to their environment.

Behaviour Purpose

The underlying objective or reason for an individual's actions or behavior.