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interest test
By Pfriansh Kar
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Last updated over 2 years ago
10 questions
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What is the basic definition of interest in business?
Money invested in a company
Profit from selling products
Payment for the use of borrowed money
Income from part-time jobs
Which term refers to the interest that is calculated only on the initial amount that was deposited or borrowed?
Simple Interest
Cumulative Interest
Residual Interest
Compound Interest
What does APR stand for in terms of interest?
Annual Percentage Rate
Asset Percentage Rate
Annual Payment Requirement
Annual Profit Return
What impact does increasing interest rate have on borrowing?
None, there is no effect on borrowing
Makes borrowing cheaper
Increases the business income
Makes borrowing more expensive
If you take a loan, what does Finance Charge represent?
Interest rate on the loan
The amount borrowed
Total cost of using credit
The premium for the loan insurance
In the formula FC = PRT, what is represented by 'P'?
Profit
Principal
Percentage
Payment
If the loan is $2000 and the add-on interest rate is 12%. What is the amount of the add-on interest for 2 years?
$240
$360
$480
$120
What is the purpose of the formula MP = (P + FC)/N in business?
Calculates monthly profits for a buisness
Calculate net profit
Calculate discount
Calculate revenue
What is the main difference between Compound and Simple Interest?
Compound interest is accumulated on principle and previous interest
Simple interest is computed on initial amount only
Compound interest is computed on the initial amount only
Both are calculated on the initial amount only
How does the frequency of compounding periods affect Compound Interest?
Frequency of compounding doesn't affect compound interest
Both Compound and Simple Interest are affected similarly by frequency
More frequent compounding results in lower interest
More frequent compounding results in higher interest