Therefore, the next interest payment will be smaller than the previous interest payment. 33. Consider the following example. The monthly payment on a five-year loan for $30,287 at 6% interest would be $585.53. It … Face (or par) value. Let us assume there is a $20,000 loan receivable, with an interest rate of 15%, on which payment has … C) unit of account. For example, receipts of investment income (interest and dividends) and payments of interest to lenders are classified as investing or financing activities. You would pay $35,131.80 in monthly payments. The world of bonds has its own unique terminology, and understanding these terms are necessary to be able to not only properly invest in bonds, but to calculate the interest payment of a bond. Operating activities c. Borrowing activities b. This number tells you how much you pay per year and may include additional costs above and beyond the interest charges. A time deposit or term deposit (in the United States also known as a certificate of deposit) is a deposit in a financial institution with a specific maturity date or a period to maturity, commonly referred to as its “term”. Throw in the 10% down payment, and the car costs $38,497. These items together—currency, and checking accounts in banks—make up the definition of money known as M1, which is measured daily by the Federal Reserve System. Lending activities d. Financing activities 34. Dividend payments to owners should be classified as cash outflows for a. time deposits. Interest payments to lenders and other creditors should be classified as cash outflows for a. Time deposits differ from at call deposits, such as savings or checking accounts, which can be withdrawn at any time, without any notice or penalty. Generally, the interest payment is related to the principal amount that is owed to the lender. $_____million. Multiply the result times the principal outstanding. Show transcribed image text. Because you're reducing the principal balance every month, the amount of interest that accumulates is likewise reduced. It represents interest payable on any borrowings – bonds, loans, convertible debt or lines of credit. C) traveler's checks . The face value of a bond can be thought of as its principal. unanswered Insurance. Example of Loan Payment. These regular monthly payments function like an annuity. Presuming that you are making interest payments only on a term loan, divide the interest rate stated in the loan documents by the number of payments made in a year. Example of Accrued Interest . Conversely, some cash flows relating to operating activities are classified as investing and financing activities. Whenever a principal payment occurs, the balance of the principal amount owed will decrease. Most lenders, such as those issuing car loans or mortgages, expect regular monthly payments that include interest and principal payments. 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