You need $25,000 today and have decided to take out a loan at 7 percent for five years

How is the principal amount of an interest-only loan repaid?    A.  The principal is forgiven over the loan period so does not have to be repaid. B.  The principal is repaid in equal increments and included in each loan payment. C.  The principal is repaid in a lump sum at the end of the loan period. D.  The principal is repaid in equal annual payments. E.  The principal is repaid in increasing increments through regular monthly payments. Refer to section 6.4

23.

An amortized loan:    A.  requires the principal amount to be repaid in even increments over the life of the loan. B.  may have equal or increasing amounts applied to the principal from each loan payment. C.  requires that all interest be repaid on a monthly basis while the principal is repaid at the end of the loan term. D.  requires that all payments be equal in amount and include both principal and interest. E.  repays both the principal and the interest in one lump sum at the end of the loan term. Refer to section 6.4

24.

You need $25,000 today and have decided to take out a loan at 7 percent for five years. Which one of the following loans would be the least expensive? Assume all loans require monthly payments and that interest is compounded on a monthly basis.    A.  interest-only loan B.  amortized loan with equal principal payments C.  amortized loan with equal loan payments D.  discount loan E.  balloon loan where 50 percent of the principal is repaid as a balloon payment Refer to section 6.4

25.	Your grandmother is gifting you $125 a month for four years while you attend college to earn your bachelor's degree. At a 6.5 percent discount rate, what are these payments worth to you on the day you enter college?    A.  $5,201.16 B.  $5,270.94 C.  $5,509.19 D.  $5,608.87 E.  $5,800.00