When Comparing Two Installment Loans with the Same Principal and Annual

question 48

Multiple Choice

When comparing two installment loans with the same principal and annual percentage rate (APR) , the loan with:

• A) the longer maturity will have the lower monthly payment and the higher total costs.
• B) the shorter maturity will have the lower monthly payment and the higher total costs.
• C) the longer maturity will have the higher monthly payment and the higher total costs.
• D) the shorter maturity will have the lower monthly payment and the lower total costs.
• E) the longer maturity will have the higher monthly payment and the lower total costs.

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Definitions:

Average Cost

The total cost of production divided by the number of units produced, indicating the cost per unit.

Copper

A reddish-brown metal with high electrical and thermal conductivity, used extensively in electrical wiring and plumbing.

Zinc

A metallic element used primarily for galvanizing steel and iron products to prevent rust; also important in biology and nutrition.

Production Function

An analytical expression that shows how the amounts of different inputs determine the maximum quantity of output that can be produced.