Question

whats the number one indicator of bad debt?
purchase price
interest rate
depreciation
lender name

Explanation:

To determine the number one indicator of bad debt, we analyze each option:

• Purchase price: Relates to the cost of an asset, not directly to bad debt likelihood.
• Interest rate: A high interest rate can make debt repayment difficult, increasing the risk of bad debt as borrowers may struggle to meet payments.
• Depreciation: Deals with asset value reduction over time, not a direct debt indicator.
• Lender name: The lender's identity doesn't indicate if a debt will become bad.

Among these, interest rate is the key factor affecting a borrower's ability to repay, making it the primary indicator of bad debt risk.

Answer:

B. Interest rate