Final answer:
In an amortization schedule, the interest charged each year decreases as the principal of the loan decreases over time.
Step-by-step explanation:
In an amortization schedule, the interest charged each year falls because the outstanding balance of the loan decreases over time. When you make regular loan payments, a portion of the payment goes towards paying off the principal (the original amount borrowed) and the remaining portion goes towards paying the interest. As the principal decreases, the interest charged each year also decreases.
For example, let's say you have a loan with a principal of $10,000 and an interest rate of 5%. In the first year, the interest charged would be $500 (5% of $10,000). But as you make payments and the principal reduces, in the second year the interest charged would be based on the new reduced principal, resulting in a lower interest amount.