Using the Rule of 78, Find the Amount of Unearned

question 20

Multiple Choice

Using the Rule of 78, find the amount of unearned interest for the loan paid in full before the date of maturity. Round to the nearest cent.
-Finance charge: $397
Total number of payments: 28
Remaining number of payments, when paid in full: 5

• A)$14.67
• B)$10.50
• C)$15.75
• D)$9.78

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Definitions:

Opportunity Cost

Represents the value of the next best alternative forgone when a decision is made to choose one option over others.

Factors Of Production

Factors of production are the inputs needed for the creation of a good or service, including land, labor, capital, and entrepreneurship.

Unemployment Of Resources

Unemployment Of Resources refers to a situation where factors of production, such as labor and capital, are not being used in the production process.

Production Possibilities Curve

A graphical representation of the maximum quantities of two goods or services that an economy can produce when utilizing its resources fully and efficiently.