To answer the question related to the provided tabular data, we need to interpret the given financial terms and their meanings. Here is a detailed, step-by-step explanation for each term:
1. Cash price minus down payment:
- This refers to the difference between the total cash price of an item and the initial down payment made by the buyer. The result is the amount that needs to be financed or paid off through installments.
2. A revolving charge account:
- This is a type of credit account where the borrower can make purchases up to a certain credit limit, pay down the balance, and then continue to use the account for more purchases. Common examples include credit cards.
3. Used to calculate rebate of finance charge:
- This term usually pertains to the method applied when determining how much of the finance charge can be refunded to the borrower, often in the context of early loan payoff.
4. Total of all monthly payments plus down payment:
- This is the overall cost to the buyer, which includes the sum of all monthly installment payments over the period of the loan plus the initial down payment made.
5. Sum of daily balance divided by number of days in billing cycle:
- This is the method to calculate the average daily balance in a billing cycle. It's a common method used by credit card companies to determine the amount of interest to charge.
6. Total of all payments minus amount financed:
- This gives you the total finance charge incurred over the loan period. It is found by subtracting the original amount financed from the total of all the payments made.
7. A payment process:
- This could refer to any method or system used to process payments, whether it be through physical transactions, electronic methods, or automatic withdrawals.
8. Doesn't dictate interest rates:
- This indicates something that is not used to establish the interest rates, such as certain types of accounts or factors that do not influence the rate determination.
9. Initial cash payment:
- This is the down payment, or the initial amount of money paid upfront when purchasing something on credit.
10. Effective interest rate:
- This represents the true interest rate on a loan, taking into account the effects of compounding over a period. It's often higher than the nominal interest rate because of these compounding effects.
11. Used in calculation of average daily balance:
- This refers to the daily balances recorded throughout the billing cycle. These balances are added together and then divided by the number of days in the cycle to find the average daily balance.
12. Purchase till maximum credit reached:
- This implies that purchases are made on a credit account until the pre-set credit limit is reached.
Each of these explanations gives a clear picture of the related financial terms and helps understand how they are used in practical scenarios.
