If a Person Is Going to Pay $1000 Per Month

question 112

Multiple Choice

If a person is going to pay $1000 per month every month for 30 years, what do you know about their mortgage (if the interest rate is positive) ?

• A)Nothing.
• B)The loan amount was more than $360,000.
• C)The loan amount was exactly $360,000.
• D)The loan amount was less than $360,000.

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Definitions:

Fixed Asset

A durable, physical asset that a company possesses and employs in its business activities to produce revenue.

Salvage Value

Salvage value is the estimated residual value of an asset at the end of its useful life, indicating how much the asset can be sold for after it is no longer useful for its intended purpose.

Estimated Life

The expected period over which an asset will be useful in the operations of a business.

Units-Of-Output Method

A depreciation technique that allocates the cost of an asset based on its usage, work output, or units produced.