Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

10. Time Value of Money

Time Value of Money Equations

Financial Accounting

10. Time Value of Money

Time Value of Money Equations

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Multiple Choice

Which of the following is a potential benefit of choosing a longer repayment period for a loan, such as 4 years instead of 2 years?

The loan principal decreases faster.

A higher interest rate is always guaranteed.

Paying less total interest over the life of the loan.

Lower monthly payments due to spreading the principal over more periods.

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Verified step by step guidance

Understand the concept of loan repayment periods: A longer repayment period means the loan principal is spread over more periods, resulting in smaller monthly payments compared to a shorter repayment period.

Analyze the impact of a longer repayment period on monthly payments: Since the principal is divided over more months, the monthly payment amount decreases, making it more manageable for borrowers.

Consider the trade-offs: While monthly payments are lower, the total interest paid over the life of the loan may increase because interest accrues over a longer period.

Evaluate the incorrect options: The loan principal does not decrease faster with a longer repayment period; instead, it decreases more slowly. A higher interest rate is not always guaranteed—it depends on the loan terms. Paying less total interest is unlikely with a longer repayment period due to extended interest accrual.

Conclude with the correct benefit: The primary advantage of choosing a longer repayment period is lower monthly payments, as the principal is spread over more periods, making it easier for borrowers to manage their cash flow.