If Creditors Add Finance Charges After Subtracting Payments Made During

question 8

Multiple Choice

If creditors add finance charges after subtracting payments made during the billing period, this is called the

• A)adjusted balance method.
• B)discount method.
• C)previous balance method.
• D)APR method
• E)average daily balance method.

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Definitions:

Payments

Payments refer to the transfer of money from one party to another in exchange for goods, services, or to fulfill a legal obligation.

Perpetuity

A type of annuity that pays an infinite series of equal payments, with no end.

Regular Payments

Periodic payments made consistently over time, such as monthly mortgage or loan repayments, or dividend payouts to shareholders.

Capitalized

Expenses or costs that are added to the value of an asset and expensed over time through depreciation or amortization, rather than immediately.