Assume a Five-Year Equal Payment Amortization Schedule with an Annual

question 107

Multiple Choice

Assume a five-year equal payment amortization schedule with an annual interest rate of 12% and annual payments.If the beginning principal is $8,000,then the first interest payment will be how large?

• A)$960.00
• B)$1,200.00
• C)$2,219.28
• D)There is not enough information to answer this question.

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Definitions:

MPS

The marginal propensity to save, which is the fraction of an additional unit of income that is saved rather than spent.

Expected Rate of Profit

The anticipated return on investment, representing the gain or loss compared to the initial investment amount.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage.

Unlimited Liability

A legal structure in which the owners of a business are personally liable for all the debts and obligations of the business, extending beyond the amount invested.