Financial transactions and calculations in consumer economics Quiz

APR represents the annual cost of borrowing, including interest and fees.

Simple interest is calculated by multiplying the principal amount by the interest rate and the time period.

Debt-to-income ratio assesses the proportion of a person's income used to repay debts, indicating financial stability.

A fixed-rate mortgage maintains a consistent interest rate throughout the loan duration.

IRA is an Individual Retirement Account, providing a tax-advantaged way to save for retirement.

An investment portfolio is not considered in FICO credit scoring; factors include payment history, credit utilization, length of credit history, types of credit, and new credit.

APY represents the total interest earned on an investment, including compound interest, over a year.

Present value is determined by discounting the future sum using the specified interest rate and time period.

Consumer credit includes loans and credit cards, not stock investments which are considered investments.

A budget helps monitor and manage personal finances by tracking income and expenses.

Future value is calculated using the compound interest formula, resulting in $5,950 for this scenario.

Compound interest is computed by multiplying the principal by the compound factor.

NPV calculates the present value of future cash flows, resulting in approximately $4,343.36 for this investment.

EPS quantifies a company's profitability per outstanding share, calculated by dividing net income by the number of outstanding shares.

ROI measures the profitability of an investment, calculated as the ratio of net profit to the cost of investment, expressed as a percentage.