When a Loan Is Amortized,the Largest Portion of the Periodic

question 111

True/False

When a loan is amortized,the largest portion of the periodic payment goes to reduce principal in the early years of the loan such that the accumulated interest can be spread out over the life of the loan.

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Definitions:

Amortization

The gradual reduction of a debt or the spreading of an intangible asset's cost over its useful life.

Depreciation Expense

The allocation of the cost of a tangible fixed asset over its useful life, reflecting the asset's consumption or wear and tear.

Book Value

The net value of a company's assets minus its liabilities, often used to evaluate the worth of a company.

Constant Percentage

A method or rate that remains unchanged over a specified period or under certain conditions.