Chapter 13, Problem 1MC

An amortization table ________.

A. breaks each payment into the amount that goes toward interest and the amount that goes toward the principal

B. is a special table used in a break room to make people feel equitable

C. separates time value of money tables into present value and future value

D. separates time value of money tables into single amounts and streams of cash

To determine

Concept introduction:

Amortization of Bonds discount or premium:

The Bonds can be issued at a discount or premium. The discount or premium on issue of bonds or the life of bonds is amortized using the effective rate methods or the straight line method.

To choose:

The correct statement about the amortization table.

Answer to Problem 1MC

Breaks each payment into the interest and principal component.

Explanation of Solution

Explanation for correct answer:

The amortization table breaks each payment into the interest and principal component. Hence the correct option is A.

Explanation for incorrect answers:

B. The amortization table does not break the room; it breaks the payment into the interest and principal component. Hence this option is incorrect.

C. The amortization table does not break the time value of money; it breaks the payment into the interest and principal component. Hence this option is incorrect.

D. The amortization table does not break the time value of money; it breaks the payment into the interest and principal component. Hence this option is incorrect.