Choose the Word or Phrase in [ ] Which Will

question 79

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.
-A finance company uses the discount method of calculating interest.The loan principal is $5,000,the interest rate is 10%,and repayment is expected in two years.You will receive [$5,000 | $4,000] from the lender.

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Definitions:

Pay Off

To completely repay the outstanding balance of a loan or debt.

Simple Interest

An interest calculation method where the interest charge is based on the original principal amount of a loan or deposit and does not accumulate or compound.

Annum

A term referring to a year, often used in financial contexts to describe periods of time related to investments or contracts.

Variable Interest Rate

An interest rate that can fluctuate over time based on underlying benchmarks or indexes.