According to the method of repayment of the loan in equal installments with the interest of the balance, the fixed periodic installment of the principal of the loan increases with the number of depreciation periods Select one: True False

According to the method of repayment of the loan in equal installments with the interest of the balance, the fixed periodic installment of the principal of the loan increases with the number of depreciation periods. If we create the amortization schedule of the loan repayments then in the early period time is more and loan amount is also more so interest is calculated for longer time period and it is larger portion of the repayment amount and principal portion is less in the fixed payment made every year. But as the loan approaches maturity time is short, interest portion will be smaller as it will calculated for less time and the principal portion will increase in the repayment amount.

Hence, in early period interest is more but decreases with time. On the other hand, with the number of increase in periods the principal portion also increases while it is lower in early periods.

So, the statement is correct

The correct option is A