Use the Following Information to Answer the Question(s)below

question 13

Multiple Choice

Use the following information to answer the question(s) below.
Taggart Transcontinental needs a $100,000 loan for the next 30 days.Taggart has three alternatives available:
Alternative #1: Forgo the discount on its trade credit agreement that offers terms of 2/5 net 35.
Alternative #2: Borrow the money from Bank A,which has offered to lend the firm $100,000 for one month at
an APR of 9%.The bank will require a (no-interest) compensating balance of 10% of the face-value of the loan and will charge a $200 loan origination fee,which means that Taggart must borrow even more than the $100,000 they need.
Alternative #3: Borrow the money from Bank B,which has offered to lend the firm $100,000 for one month at an APR of 12%.The loan has a 1% origination fee.
-The effective annual rate for Taggart if they choose alternative #1 is closest to:

• A)13.9%.
• B)18.8%.
• C)27.0%.
• D)27.9%.

---

Definitions:

Service Providers

Companies or individuals that offer services to others in exchange for payment.

Delivery Gap

The discrepancy between a company’s service quality specification and the actual service delivered to customers, often leading to customer dissatisfaction.

Communication Gap

A type of service gap; refers to the difference between the actual service provided to customers and the service that the firm’s promotion program promises.

Communication Gap

The difference or misunderstanding that occurs when the message sent is not interpreted by the receiver in the way that the sender intended.