The time value concept/calculation used in amortizing a loan is
A) future value of a dollar
B) future value of an annuity
C) present value of a dollar
D) present value of an annuity

Question

Quizplus · Accepted Answer

Amortizing a loan involves calculating the equal periodic payments required to fully repay the loan, including interest, over a specified time period. This requires the use of the present value of an annuity concept, which calculates the value of a series of equal periodic payments discounted back to their present value. The interest rate used in the present value calculation is typically the rate at which the loan was issued.

The Time Value Concept/calculation Used in Amortizing a Loan Is