Use the Rule of 78 to Find the Amount of Unearned

question 196

Multiple Choice

Use the Rule of 78 to find the amount of unearned interest for the loan paid in full before the date of maturity.
-Amount Financed: $6500 Regular Monthly Payment: $201.50
Total Number of Payments scheduled: 48
Loan repaid in full instead of making: 24th payment

• A)$43.69
• B)$2467.35
• C)$776.13
• D)$809.18

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Definitions:

Intrinsic Value

The actual worth of an asset or investment, determined through fundamental analysis without reference to its market value.

Accrual Accounting

A bookkeeping technique where income and costs are logged at the point of occurrence, irrespective of the actual cash exchange dates.

Future Cash Flows

The estimated amount of money to be received or paid out over future periods as a result of investments, operations, or financing.

Distributable Cash Flow

A measure of the cash available for distribution to shareholders, often used in assessing the health of a company or a fund.