Choose the Word or Phrase in [ ] Which Will

question 144

Short Answer

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-You are borrowing $5,000 at 9%.You may choose a 24- or 36-month repayment plan.Monthly payments will be higher with the [24-month | 36-month] plan.

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Definitions:

Interest Expense

The expense an entity faces for using borrowed capital, recorded as a non-operating cost on the income statement.

Income Statement

A financial statement that shows a company's revenues, expenses, and profits over a specific period, reflecting its financial performance.

Effective Interest Rate

The actual return on an investment or the actual cost of a loan, taking into account the effect of compounding interest.

Stated Interest Rate

The interest rate declared on a bond or loan agreement, not necessarily reflecting the market interest rate or effective interest rate.