You Want to Borrow $1,000 at an Interest Rate of 10

question 70

Multiple Choice

You want to borrow $1,000 at an interest rate of 10%. The most expensive method of calculating the dollar cost of the interest on the installment loan will be the:

• A) add-on method.
• B) double-declining-balance method.
• C) discount method.
• D) simple interest method.
• E) past-due balance method.

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, where holders typically have voting rights and may receive dividends.

Acquisition Transaction

The process where one company takes control of another company by purchasing a majority of its stock or assets.

Contingency Payment

A payment that is due only upon the occurrence of a specific event that is not certain to happen.