1.)In a(n) _________ , simple interest is added on to the amount borrowed and the total is repaid in equal installments.
a.)Monthly installment plan
=b.)add on plan
c.)Single-payment plan
2.)In a(n) _________ , interest is charged on the unpaid part of the loan, and the loan is repaid in equal monthly installments.
=a.)Monthly installment plan
b.)add on plan
c.)Single-payment plan
Add on Plan
1.) In order to determine the correct answer, we need to understand the concept of simple interest and different repayment plans. Simple interest is calculated based on the principal amount borrowed and the interest rate, without any compounding over time.
In this case, we are looking for a repayment plan where simple interest is added on to the amount borrowed, and the total is repaid in equal installments. This means that the borrower will pay a fixed amount of money every month, which includes both the principal and the interest.
Out of the given options:
a) Monthly installment plan - This seems to be a plausible option as it mentions equal installments, where both principal and interest are paid back in fixed monthly amounts.
b) Add-on plan - This option does not specify equal installments, and it is not clear whether simple interest is added to the borrowed amount.
c) Single-payment plan - This option does not involve equal installments, as the whole loan amount would be repaid in a single payment.
Based on the explanation, the correct answer would be a) Monthly installment plan.
2.) Now, in order to find the correct answer, let's understand the concept of interest charged on the unpaid part of the loan and repayment in equal monthly installments.
In this case, the borrower is charged interest on the remaining balance of the loan after each monthly payment and the loan is repaid in equal monthly installments. The interest is calculated based on the outstanding balance.
Looking at the options:
a) Monthly installment plan - This option mentions both equal monthly installments and interest charged on the unpaid part of the loan, which matches the criteria.
b) Add-on plan - This option does not mention interest charged on unpaid amount, so it is not the correct answer.
c) Single-payment plan - This option does not involve equal monthly installments and does not mention charging interest on the unpaid part of the loan.
Based on the explanation, the correct answer would be a) Monthly installment plan.