Answer :
To determine what is true about the interest a borrower pays, let's carefully analyze each given statement:
1. It is calculated by using a percentage.
2. It is usually 75% of the loan amount.
3. It is usually [tex]$1,000 on any loan. 4. It always is a specific dollar amount. ### Statement Analysis: 1. It is calculated by using a percentage: - Interest on a loan is typically calculated as a percentage of the loan amount (also known as the principal). - This percentage is often referred to as the interest rate. For instance, if the interest rate is 5% per annum, the borrower pays 5% of the outstanding loan balance each year as interest. 2. It is usually 75% of the loan amount: - Suggesting that interest is usually 75% of the loan amount is misleading and incorrect. - Interest rates are generally much lower and are percentages of the principal per year. An interest rate as high as 75% is unrealistic for most standard loans. 3. It is usually $[/tex]1,000 on any loan:
- This statement is not accurate because the interest on a loan depends on the loan amount, the interest rate, and the term of the loan.
- For small loans, the interest may be less than $1,000, whereas for large loans, it can be much more.
4. It always is a specific dollar amount:
- This statement is not entirely true either. Although in certain types of loans (like fixed-rate mortgages) the periodic payment amounts may be fixed, the interest portion can still vary based on different factors such as the remaining balance of the loan.
### Conclusion:
Based on the careful analysis of the given statements, the only accurate assertion regarding how interest is determined is:
It is calculated by using a percentage.
This is because interest on loans is typically calculated as a percentage of the principal loan amount.
1. It is calculated by using a percentage.
2. It is usually 75% of the loan amount.
3. It is usually [tex]$1,000 on any loan. 4. It always is a specific dollar amount. ### Statement Analysis: 1. It is calculated by using a percentage: - Interest on a loan is typically calculated as a percentage of the loan amount (also known as the principal). - This percentage is often referred to as the interest rate. For instance, if the interest rate is 5% per annum, the borrower pays 5% of the outstanding loan balance each year as interest. 2. It is usually 75% of the loan amount: - Suggesting that interest is usually 75% of the loan amount is misleading and incorrect. - Interest rates are generally much lower and are percentages of the principal per year. An interest rate as high as 75% is unrealistic for most standard loans. 3. It is usually $[/tex]1,000 on any loan:
- This statement is not accurate because the interest on a loan depends on the loan amount, the interest rate, and the term of the loan.
- For small loans, the interest may be less than $1,000, whereas for large loans, it can be much more.
4. It always is a specific dollar amount:
- This statement is not entirely true either. Although in certain types of loans (like fixed-rate mortgages) the periodic payment amounts may be fixed, the interest portion can still vary based on different factors such as the remaining balance of the loan.
### Conclusion:
Based on the careful analysis of the given statements, the only accurate assertion regarding how interest is determined is:
It is calculated by using a percentage.
This is because interest on loans is typically calculated as a percentage of the principal loan amount.