In relation to long-term financing, an amortised loan involves:Question 2Select one:a.periodic payments principal and interest repaid at maturity.b.periodic interest and principal repayments when positive cash flows begin.c.periodic interest payments and principal repaid at maturity.d.periodic equal repayments of interest and principal throughout the term.

Identify a true statement about long-term loans.Multiple choice question.The debt incurred is usually repaid according to a floating interest rather than a fixed interest.These loans can make funds available for up to two years.The principal can sometimes start being repaid in the second or third year of the loan, with only interest paid the first year.These loans are often used for seasonal financing and for building up inventories.

How should repayment of a long-term loan comprising repayment of the principal amount and interest due to date on the loan be treated in a statement of cash flow?a.The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities” section; the interest payment belongs in the “operating activities” section (because IAS 7 does not permit any alternatives in case of interest payments).b.The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities” section; the interest payment belongs either in the “operating activities” section or the “investing activities” section.c.The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities” section; the interest payment belongs either in the “operating activities” section or the “financing activities” section.d.The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities” section; the interest payment should be netted against interest received on bank deposits, and the net amount of interest should be disclosed in the “operating activities” section.

Which of the following describe an installment loan? Select all that apply.Group of answer choicesA loan that is repaid in varying amounts.A loan that is repaid in equal amounts.A loan that must be repaid in a specific period of time (e.g. 5 years).An open line of credit or loan that is not limited to a specific period of time.

Which of the following debt repayment profiles involves a growing principal amount over time?Pay in kind debtEquityMezzanine financeSenior Debt

How do you find the remaining balance on an amortizing loan after a certain number of payments?*Divide the remaining payments by the interest rateSubtract the payments made from the original principalUse an amortization schedule or formula to calculate the remaining principalSubtract the interest paid from the total loan amount