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Assume You Borrow $12,000 for 5 Years with Equal Annual

Question 26

Multiple Choice

Assume you borrow $12,000 for 5 years with equal annual repayments.If the interest rate on the actual loan turns out to be higher than you anticipated,then the:


A) total principal repaid will be less than anticipated.
B) loan will still have a balance due at the end of the 5-year amortization period.
C) first annual payment will repay more of the principal than anticipated.
D) anticipated amortization schedule will still apply as the loan is still a 5-year loan.
E) annual payments will be higher than you anticipated.

Correct Answer:

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