A mortgage note payable with a fixed interest rate requires the borrower to make

Question

A mortgage note payable with a fixed interest rate requires the borrower to make installment payments over the term of the loan. Each installment payment includes interest on the unpaid balance of the loan and a payment on the principal. With each installment payment, indicate the effect on the portion allocated to interest expense and the portion allocated to principal.

Portion Allocated to Interest Expense Portion Allocated to Payment of Principal Decreases Increases Increases Increases Increases Decreases Decreases Decreases

Explanation / Answer

Portion allocated to Interest expense portion allocated to payment of principal

Increases Increases

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