Which Formula Dictates That You Pay More Interest at the Beginning

question 132

Multiple Choice

Which formula dictates that you pay more interest at the beginning of the loan and pay less and less interest as the debt is reduced?

• A) Adjusted balance method
• B) Previous balance method
• C) The rule of 78s
• D) Average daily balance
• E) Accelerated balance

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Definitions:

FUTA Taxes

Federal Unemployment Tax Act taxes, which are payroll taxes paid by employers to fund the unemployment insurance system.

Liability

A company’s or individual’s legal financial debts or obligations that arise during the course of business operations.

Percentage Method

An IRS method for calculating the amount of taxes to withhold from an employee's paycheck based on income brackets.

Federal Income Tax

An annual charge imposed by the U.S. government on the income of individuals, businesses, trusts, and various legal bodies.