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

How does a higher Annual Percentage Rate (APR) affect the monthly payments and total interest paid on a fixed-rate loan, assuming the loan amount and term remain the same?

Monthly payments increase, but total interest decreases.

Monthly payments and total interest both decrease.

Monthly payments and total interest both increase.

Monthly payments decrease, but total interest increases.

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Verified step by step guidance

Understand the concept of Annual Percentage Rate (APR): APR represents the annual cost of borrowing, including interest and fees, expressed as a percentage. A higher APR means the cost of borrowing is more expensive.

Recognize the relationship between APR and monthly payments: For a fixed-rate loan, a higher APR increases the interest portion of each monthly payment, leading to higher monthly payments overall.

Analyze the impact on total interest paid: Since the APR is higher, the borrower pays more interest over the life of the loan, assuming the loan amount and term remain constant.

Compare the options provided: Evaluate each statement against the relationship between APR, monthly payments, and total interest. The correct answer is the one that reflects both monthly payments and total interest increasing.

Conclude that the correct answer is: 'Monthly payments and total interest both increase,' as this aligns with the financial impact of a higher APR on a fixed-rate loan.