Discussion
In a loan repaid by equal instalments, the interest portion of each payment
Answer: C
Correct answer: decreases as the loan is repaid
Interest is charged on the balance outstanding, and that balance falls with every payment, so the interest portion falls and the principal portion rises even though the instalment itself is constant. This is why the early payments of a long loan repay so little principal, and why an amortisation schedule is worth drawing out.
No comment is present. Be the first to comment.
Loading…
Post your comment
Please log in or register to post a comment.
Examination Categories
- SSC Exams
- Banking Exams
- Teaching Exams
- Civil Services Exams
- Railways Exams
- Engineering Recruitment Exams
- Defence Exams
- State Government Exams
- Police Exams
- Insurance Exams
- Nursing Exams
- Other Government Exams
- NRA CET
- PG Entrance Exams
- Campus Placement
- MBA Entrance Exams
- CUET and UG Entrance
- Judiciary Exams
- Regulatory Body Exams
- Software Development