You are reviewing the most recent three years financial statements of a potential partner and notice that their loan balances and their interest expense is declining slowing over the three-year period. They have told you that they have had the same loans outstanding over the three-year period (no loans paid off and no new loans signed). What is the likely explanation for the decrease in loan balances and interest expense?

Their loans only require interest payments until maturity.

They have periodic payment (installment) notes.

They have only bonds with market interest rates declining.

They have lump sum payment (non-interest bearing) loans.