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If the Discount Method Is Used to Calculate a Finance

question 105

True/False

If the discount method is used to calculate a finance charge of $250.60 on a $2,400 loan,the amount to be repaid is $2,400.


Definitions:

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash or additional stock.

Constant Growth

A model assuming that dividends or any other type of cash flow grow at a constant rate indefinitely.

Debt/Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity.

Weighted Average Cost Of Capital

The average rate that a company is expected to pay to finance its assets, weighted according to the proportion of equity and debt in its capital structure.

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