If a term loan requires equal annual payments that pay the interest and retire the principal, that is similar to
A) lease payments
B) mortgage payments
C) dividend payments
D) compensating balances

Question

If a term loan requires equal annual payments that pay the interest and retire the principal, that is similar to​
A) ​lease payments
B) ​mortgage payments
C) ​dividend payments
D) ​compensating balances

Quizplus · Accepted Answer

Mortgage payments also require equal annual payments that pay the interest and retire the principal. Lease payments do not necessarily retire the principal, dividend payments are payments to shareholders for holding stock, and compensating balances are requirements to maintain a certain level of deposits in a bank account.

If a Term Loan Requires Equal Annual Payments That Pay