Principal & Interest

What is the purpose of borrowing money in the context of financing?

• To save for future expenses

• To pay expenses

• To invest in stocks

• To donate to charity

Which type of loan is associated with investment expenses for noncurrent assets?

• Line of credit

• Operating loan

• Mortgage for land or building

• Credit card

Which of the following is a government-backed financier for loans?

• Local grocery store

• Farm Credit Services

• Private tutoring center

• Local gym

What is the principal amount if the car costs $16,500 and you pay $2,000 upfront?

• $14,500

• $16,500

• $2,000

• $18,500

If the principal is $10,000 and the APR is 5%, what is the annual interest?

• $500

• $450

• $550

• $600

Why is it important to multiply the principal by the APR?

• To calculate the total loan amount

• To determine the annual interest

• To find the monthly payment

• To reduce the principal

What is the purpose of dividing by the number of months in a year when calculating interest?

• To adjust for a shorter loan term

• To calculate the monthly interest rate

• To find the annual interest rate

• To determine the principal amount

If a loan term is 6 months, how would you adjust the interest calculation?

• Multiply by 6

• Multiply by 0.5

• Divide by 6

• Divide by 0.5

What is the actual amount of money a person borrows called?

• Interest

• Principle

• Dividend

• Finances

What is known as the fee charged for borrowing money?

• Dividend

• Interest

• Capital Gain

• Liquidity