If you owe $1,200.00, which is the most advantageous way to pay it back assuming a 12% APR discount rate?
A)$100.00 monthly payments over the next twelve months
B)$300.00 quarterly payments over the next four quarters
C)$600.00 paid every six months over the next year
D)$1,200.00 paid after one year

Question

Quizplus · Accepted Answer

Paying the full amount after one year is the most advantageous because the 12% APR discount rate implies that the present value of the future payment is less than $1,200.00, making it cheaper in today's terms compared to spreading payments over time.

If You Owe $1,200