   Chapter 13, Problem 14CR ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

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 12-month loan is 78, it can also be termed as Rule of 78.

Sum-of-the-d

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