Question

The assumption of a stable interest expense per year is inherent under which of the following amortization methods? a. present-value method b. effective interest method c. stated-interest method d. straight-line method

Answer 1

The assumption of a stable interest expense per year is inherent under the straight-line method of amortization.

Step-by-step explanation:

The assumption of a stable interest expense per year is inherent under the straight-line method of amortization.

Under the straight-line method, an equal amount of interest expense is allocated over the term of a loan or bond. This means that the interest expense remains constant each year.

For example, if a loan has a total interest expense of $1,000 and a term of 5 years, the annual interest expense under the straight-line method would be $200 ($1,000 divided by 5 years).