The Value of a Loan of $2,000 After a Year

question 35

Multiple Choice

The value of a loan of $2,000 after a year at 2 percent interest is:

• A) $4,000.
• B) $2,020.
• C) $2,040.
• D) $2,400.

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Definitions:

Liability

Anything owed to creditors—the claims of a company’s creditors.

Creditors

Individuals or institutions to whom money is owed by a debtor or borrower.

Business

Organizational entities that are involved in the trade of goods, services, or both to consumers, with the primary purpose of earning profits.

Owners' Equity

The residual interest in the assets of an entity after deducting liabilities, essentially the net worth belonging to the owners.