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1 year ago

What is the term used to describe the reduction of the balance owed on a loan with each payment made over a period of time?

Business

1 answer:

jeyben [28]1 year ago

8 0

Answer:

The term used to describe the reduction of the balance owed on a loan with each payment made over a period of time is:

d. amortization.

Explanation:

Amortization of a loan is the gradual reduction of the balance owed on a loan because payments are being made over a period of time. Each payment is, therefore, a reduction of the borrowed fund. This gradual reduction through periodic payments is called amortization of the borrowed fund. Loan amortization, therefore, implies the spreading out of the loan payments over time. It is not the same as asset amortization, which is a kind of depreciation.

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2 years ago

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2 years ago

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1 year ago

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3 years ago

A common error made when solving a future value of an annuity problem is: Multiple Choice Using factor tables to help solve the

ivanzaharov [21]

Answer:

Multiplying the annual deposit and the number of years before calculating the problem.

Explanation:

An annuity can be defined as a sequence of payment that is typically made at equal intervals i.e at specific period of time.

Basically, annuity can be calculated using the compound interest formula. It is given by the mathematical expression;

$A = P(1 + \frac{r}{n})^{nt}$

Where;

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P is the principal or starting amount.

r is annual interest rate.

n is the number of times the interest is compounded in a year.

t is the number of years for the compound interest.

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2 years ago