If the Add-On Method Is Used to Calculate a Finance

question 76

Multiple Choice

If the add-on method is used to calculate a finance charge of $150.80 on a $2,200 loan,the amount to be ____________. ​

• A)repaid is $2,200
• B)disbursed to the borrower is $2,049.20
• C)repaid is $2,350.80
• D)disbursed to the borrower is $2,350.80

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Definitions:

Compounded Yearly

An interest calculation where the interest is added to the principal balance once a year, allowing the total amount to earn interest annually.

Economic Advantage

A benefit or gain in a financial context that gives an individual, company, or country a better position compared to others.

RRSP

Registered Retirement Savings Plan, a Canadian account for holding savings and investment assets, aimed at retirement planning with tax benefits.

Compounded Monthly

Interest calculation method where interest is added to the principal every month, affecting the total interest earned or paid.