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MCQ on Loan Amortization

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Loan amortization, which refers to determining equal annual loan payments, can be implemented by which of the following?

a. Adding the loan amount by the interest factor for the present value of an annuity for the appropriate discount rate and number of years.

b. Subtracting the loan amount by the interest factor for the present value of an annuity for the appropriate discount rate and number of years.

c. Multiplying the loan amount by the interest factor for the present value of an annuity for the appropriate discount rate and number of years.

d. Dividing the loan amount by the interest factor for the present value of an annuity for the appropriate discount rate and number of years.

e. Summed up the loan amount by the interest factor for the present value of an annuity for the appropriate discount rate and number of years.

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Provides steps necessary to determine which strategy implements loan amortization.

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Present value ( loan amount) = interest factor for the present value of an annuity x equal ...

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