The Time Value Concept/calculation Used in Amortizing a Loan Is

question 136

Multiple Choice

The time value concept/calculation used in amortizing a loan is

• A) future value of a dollar
• B) future value of an annuity
• C) present value of a dollar
• D) present value of an annuity

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Definitions:

Discount Rate

The interest rate charged to commercial banks and other financial institutions for the loans they take from the central bank's discount window, also a factor in present value calculations.

Perpetuity

A type of annuity that continues indefinitely, often used in financial modeling to represent a constant stream of identical cash flows without an end.

Interest Per Month

Interest per month is the amount of interest charged or earned on a loan or investment for a one-month period, typically expressed as a percentage of the principal.

Year-end Balance

The total amount of money in an account or on the financial statements at the conclusion of the fiscal year.