A Mortgage Note Payable with a Fixed Interest Rate Requires

question 30

Short Answer

A mortgage note payable with a fixed interest rate requires the borrower to make blended principal and interest payments over the term of the loan. Each instalment payment includes interest on the unpaid balance of the loan and a payment on the principal. With each instalment payment, indicate the effect on the portion allocated to interest expense and the portion allocated to principal.
$\begin{array}{lcc}&\text{Portion Allocated to Interest Expense} & \text{Portion Allocated to Principal}\\\text { a) } & \text { increases } & \text { increases } \\\text { b) } & \text { increases } & \text { decreases } \\\text { c) } & \text { decreases } & \text { decreases } \\\text { d) } & \text { decreases } & \text { increases }\end{array}$

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