Suppose that over the life of the loan, the total interest expense for a monthly loan is $17,000, while the total interest payment for an annual loan is $19,000. Which of the below statements is FALSE?
A) The difference reflects the reduction of the principal each month versus the annual reduction of the principal.
B) The more frequent the payment, the lower the total interest expense over the life of the loan, even though the effective rate of the loan is higher.
C) Reducing principal at a slower pace reduces the overall interest paid on a loan.
D) Reducing principal at a slower pace increases the overall interest paid on a loan.
Answer: C
Explanation: C) Reducing principal at a FASTER pace reduces the overall interest paid on a loan.
You might also like to view...
On the statement of cash flows prepared by the indirect method, the cash flows from operating activities sectionwould include
a. receipts from the sale of investments b. amortization of premium on bonds payable c. payments for cash dividends d. receipts from the issuance of capital stock
"In nearly every economic crisis, the root cause is political, not economic," observed
A. Adam Smith. B. Lee Kuan Yew. C. Ben Bernake. D. Abraham Lincoln.
The first step in ensuring the production of high-quality products is to have a sound product design
Indicate whether the statement is true or false
In operant conditioning, if we want to cause the behavior to increase, then we want to use positive reinforcement or ______.
A. negative reinforcement B. punishment C. extinction D. onboarding