Question

With which type of amortization does the amount applied toward the principal remain the same each month, with the interest amount varying according to the outstanding loan balance

Answer 1

With Straight line of amortization, the amount applied toward the principal remain the same each month, with the interest amount varying according to the outstanding loan balance.

What is amortization?

• Spreading payments across a number of time periods is known as amortization in business.
• Both the amortization of debts and the amortization of assets fall under this umbrella phrase.
• In the latter instance, it refers to spreading out the cost of an intangible asset over time (for instance, throughout the course of a 20-year patent term, $1,000 would be recorded each year as an amortization expense if $20,000 was initially spent producing a product).
• As defined by an amortization schedule, amortization in the context of lending is the division of loan repayments into a number of cash flow instalments. Unlike other repayment plans, this one includes principal, interest, and occasionally fees if they weren't paid at origination or closing.

To learn more about amortization with the given link

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