Question

determine whether the statement is true of false. if the statement is false, make the necessary change(s) to produce a true statement.
over the life of an installment loan, the interest portion increases and the portion applied to paying off the principal decreases with each successive payment.

choose the correct answer below.
a. the statement is true.
b. the statement is false. to make the statement true, change \increases\ to \decreases\
c. the statement is false. to make the statement true, switch \increases\ and \decreases\
d. the statement is false. to make the statement true, change \decreases\ to \increases\

Explanation:

For an installment loan, interest is calculated on the remaining principal. As payments are made, the principal balance decreases. So, the interest portion (which depends on the principal) should decrease over time, while the portion applied to principal should increase. The original statement says interest increases and principal payment portion decreases, which is false. To correct it, we switch "increases" and "decreases" (so interest decreases and principal payment portion increases), which matches option C.

Answer:

C. The statement is false. To make the statement true, switch "increases" and "decreases"