The method of calculating interest once during the entire life of the loan, on the original sum borrowed, is known as:

Question

BlackTom AI · Accepted Answer

The question asks about a method of calculating interest that involves applying interest only to the original principal for the entire loan term, without compounding.
Option 1: 'rule of 72.' This is a quick heuristic used to estimate how long it takes for an investment to double at a given interest rate, not a method of calculating interest on a loan. It does not describe how interest is computed.
Option 2: 'compounding.' Compounding means interest is calculated on the accumulated amount, including previously earned interest. This is the opposite of simple interest, where interest is not earned on interest.
Option 3: 'interest on interest.' This phrase describes the effect of compounding, where interest earns interest in future periods. It is not the method described in the question.
Option 4: 'simple interest.' This is the method where interest is computed only on the original principal for the entire life of the loan, with no accumulation of interest on previously earned interest. This directly matches the description given in the question.

BFIN011 Week 4 Online Assessable Quiz - 45 minutes |LA001

The method of calculating interest once during the entire life of the loan, on the original sum borrowed, is known as:

查看解析

登录即可查看完整答案

类似问题

Simple interest grows exponentially over time.

If you had a loan for $30,000 at an annual interest rate of 8 percent with a 90-day interest prepayment penalty, what would be the amount of your penalty?

If you take out a loan for $2,000 at an annual interest rate of 10%, how much interest will you pay each year?

A Term Deposit of $7 200 was taken out on 1 July 2018. Interest is earned at 5% per annum. Interest is payable on 30 September and 30 March each year. What amount of interest will be received as a cash receipt from the Bank on 30 March 2019?

Eunchae invested $2,000 six years ago at 4.5 percent interest. She spends all of her interest earnings immediately so she only receives interest on her initial $2,000 investment. Which type of interest is she earning?

Eunchae invested $2,000 six years ago at 4.5 percent interest. She spends all of her interest earnings immediately so she only receives interest on her initial $2,000 investment. Which type of interest is she earning?

How much money will you accumulate in 119 days, if you invest $9,000 today at an interest rate of 4% per year ? Round your answer to 2 decimal places (If the answer is 6.59871 -> enter as 6.60)

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单