If the add-on method is used to calculate a finance charge of $100.80 on a $1,800 loan, the amount to be:
A) repaid is $1,900.80.
B) paid to the borrower is $1,699.20.
C) repaid is $1,699.20.
D) repaid to the borrower is $1,800.
E) paid to the borrower is $100.80.

Question

Quizplus · Accepted Answer

The add-on method involves adding the total finance charge to the principal amount of the loan. Therefore, if the finance charge is $100.80 on a $1,800 loan, the total amount to be repaid is $1,800 + $100.80 = $1,900.80.

If the Add-On Method Is Used to Calculate a Finance