How Is the Principal Amount of an Interest-Only Loan Repaid

question 94

Multiple Choice

How is the principal amount of an interest-only loan repaid?

• A)The principal is forgiven over the loan period so does not have to be repaid.
• B)The principal is repaid in equal increments and included in each loan payment.
• C)The principal is repaid in a lump sum at the end of the loan period.
• D)The principal is repaid in equal annual payments.
• E)The principal is repaid in increasing increments through regular monthly payments.

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Definitions:

Fair Value

The estimated price at which an asset could be bought or sold in a current transaction between willing parties, other than in a liquidation sale.

Property Plant

Property, plant, and equipment (PP&E) are tangible fixed assets used in the production or supply of goods and services, minus accumulated depreciation.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by an independent organization, providing a global framework for how public companies prepare and disclose their financial statements.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board that is globally accepted for preparing financial statements.