When calculating interest on loans with terms of days, there are two methods. Ordinary interest uses the 365 day calendar. Exact interest adds one extra day (366) to account for leap year. True or False

When calculating interest on loans with terms of days, there are two methods. Ordinary interest uses the 365 day calendar. Exact interest adds one extra day (366) to account for leap year. True or False

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

9th Edition

ISBN:9781305635937

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter15: Working Capital Management

Section: Chapter Questions

Problem 8Q: Define each of the following loan terms, and explain how they are related to one another: the prime...

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Concept explainers

Credit card

A credit card is provided by financial institutions or banks, which permits a person to borrow money on a preapproved limit for purchases on a credit basis. The credit limit is decided by the institution and bank which issues a credit card depending on the person’s credit score and income. A cardholder can use the card for credit purchases, a balance transfer, cash advances.

Question

14. When calculating interest on loans with terms of days, there are two methods.

Ordinary interest uses the 365 day calendar.

Exact interest adds one extra day (366) to account for leap year.

True

False

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