If total projected repayments are €320,000 and the amount borrowed is €240,000, what is the cost of credit?

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Multiple Choice

If total projected repayments are €320,000 and the amount borrowed is €240,000, what is the cost of credit?

Explanation:
The cost of credit is the extra amount you pay for borrowing, calculated as total repayments minus the amount borrowed. Here, total repayments are €320,000 and the amount borrowed is €240,000, so the cost of credit is 320,000 − 240,000 = €80,000. This reflects interest and any charges over the life of the loan. The other figures represent either the total repayments or the principal borrowed, not the extra cost.

The cost of credit is the extra amount you pay for borrowing, calculated as total repayments minus the amount borrowed. Here, total repayments are €320,000 and the amount borrowed is €240,000, so the cost of credit is 320,000 − 240,000 = €80,000. This reflects interest and any charges over the life of the loan. The other figures represent either the total repayments or the principal borrowed, not the extra cost.

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