Discussion
The outstanding balance of a loan at any date equals the present worth of the
Answer: A
Correct answer: remaining payments
At any date the debt is worth what is still owed, and what is still owed is the present worth of the payments yet to be made, discounted at the loan rate. Subtracting the payments made from the original principal gives a figure that is too high, because part of each payment was interest and never touched the principal.
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