While Each Payment of an Installment Note Is the Same

question 53

Multiple Choice

While each payment of an installment note is the same amount,which of the following statements is true?

• A)All payments will cover the same amount of interest and principal
• B)The first payments will cover more interest expense than the later payments.
• C)The first payments will cover more principal than the later payments.
• D)The first installment payments cover interest until it is paid and then the remaining payments cover the repayment of the principal.

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Definitions:

Federal Income Taxes

Federal government-imposed charges on the yearly earnings of individuals, corporations, trusts, and other legal entities.

Net Income

What a business earns in profit once every cost and tax is deducted from its revenue.

Bonus Plan Expense

Costs associated with incentive-based compensation programs designed to reward employees for their performance.

Gross Earnings

Gross earnings refer to the total income earned by an individual or company before any deductions such as taxes or other withholdings.