Solve the Problem

question 16

Multiple Choice

Solve the problem. Round to the nearest cent as needed.
-A bank has $750,000 to lend for 7 months.It can lend it to a local contractor at a simple interest rate of 12%,or it can lend it to a small business that will pay 12% compounded monthly.If the bank wants to maximize its interest earned,who should receive the loan (contractor or business) and what is the additional interest earned?

• A)Contractor; $52,500
• B)Business; $1601.51
• C)Contractor; $1601.51
• D)Business; $54,101.51

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Definitions:

IRS Regulations

Rules and guidelines issued by the Internal Revenue Service governing federal tax administration in the United States.

Employment Taxes

Taxes that an employer is required to withhold and/or pay on behalf of their employees, including income tax, social security, and Medicare taxes.

Family Leave

An approved absence from work, typically for the birth or adoption of a child or for the care of family members.

Medical Leave

Authorized absence from work granted to an employee due to health reasons, ensuring job protection and, in some cases, continued pay.