Which of the Following Statements Is True About Bank Credit

question 112

Multiple Choice

Which of the following statements is true about bank credit cards like VISA and MasterCard?

• A) They are an excellent source of emergency funds for unexpected expenses.
• B) Their interest rate is generally lower than a loan at a credit union.
• C) Like home equity loans, the interest paid on credit cards is tax deductible.
• D) Their interest rate is lower than home equity lines of credit.

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Definitions:

Payback Period

The amount of time it takes to recover the cost of an investment, calculating how long it will take to break even from the initial expenditures.

Net Cash Inflows

The total amount of money received minus money spent over a certain period, often used in evaluating project profitability.

Remodeling Expenses

Costs incurred for updating or renovating a property to increase its value or utility.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess profitability.