Joe borrows $100 000 and agrees to repay the principal, plus 7% APR interest compounded monthly, at the end of three years. Joe has taken out an amortising loan.

Question

Quizplus · Accepted Answer

An amortizing loan involves regular payments that cover both principal and interest, gradually reducing the loan balance over time. The scenario described does not specify regular payments but rather a lump sum repayment at the end, which does not fit the definition of an amortizing loan.

Joe Borrows $100 000 and Agrees to Repay the Principal