When Comparing Two Installment Loans with the Same Principal and Annual

question 49

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

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Definitions:

Times Interest Earned Ratio

A financial metric assessing a company's ability to meet its debt obligations by comparing its income before interest and taxes (EBIT) to its interest expenses.

Net Income

The profit resulting after all expenses, taxes, and costs have been deducted from total revenues.

Interest Expense

The cost incurred by an entity for borrowed funds, which can include costs related to bonds, loans, and lines of credit.

Inventory Turnover Ratio

A financial metric indicating how many times a company's inventory is sold and replaced over a specific period.