Chapter 13, Problem 14CR

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

The most common method for calculating the finance charge rebate of an installment loan is known as the sum-of-the-___method or the Rule of ______. (13-8)

To determine

**To fill:** The blank space provided for the statement, “The most common method for calculating the finance charge rebate of an installment loan is known as the sum-of-the-_____ method or the Rule of _____”.

Explanation

This method states that, the lender earns more interest at the early stage of the loan when most of the amount lies with borrower, than in the later stage.

In this method, the finance charge is divided into parts equal to the sum of the digits of the months of the loan.

As the sum of the digits of a

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