Temple Corporation purchased a piece of real estate, paying $4,000,000 cash and financing $7,000,000 of the purchase price with a 10-year, 15% installment note. The note calls for equal monthly payments that will result in the debt being completely repaid by the end of the tenth year. In this situation:A: The aggregate amount of the monthly payments is $7,000,000.B: Each monthly payment is greater than the amount of interest accruing each month.C: The portion of each payment representing interest expense will increase over the 10year period, since principal is being paid off, yet the payment amount does not decrease.D: The portion of each monthly payment representing repayment of principal remains the same throughout the 10-year period.

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Asked Dec 19, 2019
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 Temple Corporation purchased a piece of real estate, paying $4,000,000 cash and financing $7,000,000 of the purchase price with a 10-year, 15% installment note. The note calls for equal monthly payments that will result in the debt being completely repaid by the end of the tenth year. In this situation:

A: The aggregate amount of the monthly payments is $7,000,000.

B: Each monthly payment is greater than the amount of interest accruing each month.

C: The portion of each payment representing interest expense will increase over the 10year period, since principal is being paid off, yet the payment amount does not decrease.

D: The portion of each monthly payment representing repayment of principal remains the same throughout the 10-year period.

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Expert Answer

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Every monthly instalment includes the Principle amount and Interest amount. Payment of Principle amount will decrease the outstandin...

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