Discussion Question 2:
When a person gets a mortgage on their home, they usually also get an amortization schedule showing (for a 30 year mortgage) each of 360 payments listed with the amount of principle being paid and the amount of interest. The surprise to the homeowner is usually how small an amount of principle is being paid. Why is more interest paid at the beginning of a loan period than at the end of the loan period? What would be one way of reducing the interest due on a loan over the term of the loan?
<br>Why is more interest paid at the beginning of a loan period than at the end of the loan period?
<br>Because you owe a larger portion of the principal at that point in ...
This question involves the fundamentals of Managerial Finance