What is the effect of compounding interest?A. It decreases total interest earned over timeB. It keeps the interest constantC. It increases interest earned over time by earning interest on interestD. It applies only to loans, not investments need answer !!
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What is the effect of compounding interest?
A. It decreases total interest earned over time
B. It keeps the interest constant
C. It increases interest earned over time by earning interest on interest
D. It applies only to loans, not investments
need answer !!
Step by step
Solved in 2 steps
- 1. True or false. Rate of return is the interest earned on the unpaid balance of an amportized loanWhat is the advantage of a variable-interest loan? Protects the borrower from rising interest rates Makes it easier for the borrower to plan for future payments Borrower can capitalize on a reference rate decrease Reduces the total interest paymentsWhich one pays more (for the same amount and same interest rate), a saving account with a simple interest rate or with compounded interest rate?
- When you borrow money, you typically have to pay an interest rate. What does interest represent? a) The cost of borrowing money b) The profit earned on an investment c) A bank fee d) A penalty for late payment????To account for a down payment, adjust the _____ of the loan by subtracting it from the loan amount. O present value (pv) future value (fv) rate O typePart B: Choose the correct option for each question (loans) A) increased, increased B) increased, decreased C) decreased, increased D) decreased, decreased E) Increased, No change F) Decreased. No change Question 1. For a loan, what effect does decreasing the interest rate have on the interest paid and length of loan? 2. For a loan, what effect does increasing the interest rate have on the interest paid and length of loan? 3. For a loan, what effect does decreasing the number of compounding periods have on the interest paid and length of loan? 4. For a loan, what effect does increasing the number of compounding periods have on the interest paid and length of loan? 5. For a loan, what effect does increasing the frequency of payments have on the interest paid and length of loan? 6. For a loan, what effect does decreasing the frequency of payments have on the interest paid and length of loan? Answer [Ex: F) Decreased, No change)
- Loan Amount Is $430,000 Loan is a 7/30 Balloon Loan Annual Interest is 3.75%, with monthly payments What Is the monthly payment for the loan? Enter as a positive numberHow would an increase in the interest rate effect the present value of an annuity problem (all other variables remain the same)What does the Excel argument Nper refer to? Number of periods of time for a loan or investment. The constant periodic payment required to pay off a loan or investment. Periodic interest rate. Present value of an investment.
- Simple interest refers to interest on a loan computed as a percentage of the loan amount. Compound interest refers to the process of, investing your money. saving your money. C a loan amortization. a loan computed at a nominal interest rate. E earning interest on interest.Increasing the number of payments on a mortgage loan always decreases the payment amount, all other key variables held constant. True FalseIn the PMT function, what is not true about the rate argument? Group of answer choices It assumes an annual interest rate. It can contain references to fields. It is optional. It reflects the interest charged on a loan.
