Which of the Following Statements Is True of Annual Percentage

question 93

Multiple Choice

Which of the following statements is true of annual percentage rate (APR) ?

• A) The Truth-in-Savings Act was passed by Congress to ensure that the true cost of credit was disclosed to consumers.
• B) The Truth-in-Lending Act was passed to provide consumers an accurate estimate of the return they would earn on an investment.
• C) The Truth-in-Savings Act and Truth-in-Lending Act require by law that the APR be disclosed on all consumer loans and savings plans.
• D) The annual percentage rate (APR), and not the effective annual interest rate (EAR), represents the true economic interest rate.

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Definitions:

Sunk Cost

Costs that have already been incurred and cannot be recovered or changed, and thus should not affect future business decisions.

Salvage Value

The anticipated residual value of an asset after it has been fully depreciated and is no longer in use.

Net Working Capital

The variance between a corporation's current assets and its current debts, highlighting its short-term financial status.

Operating Cash Flow

Operating Cash Flow is the cash generated from the normal operations of a business, reflecting its ability to generate sufficient positive cash flow to maintain and grow its operations.