Burlingame Co

Multiple Choice

Burlingame Co.is purchasing a new forklift to be used in its warehousing operations.Burlingame borrowed $120,000 from its bank in return for an installment note with 8% interest.Burlingame will make 6 equal annual payments of $25,958.Which of the following is correct regarding this note?

A) There is a balloon payment of principal due to the lender at the end of the 6^th period.
B) The payments will decrease each year as a portion of the principal is paid.
C) Each payment includes both principal and interest.
D) Interest expense will increase each year.