Smyth Company Borrows $10,000 by Giving the Bank Its Own

question 113

Multiple Choice

Smyth Company borrows $10,000 by giving the bank its own 12%,60-day note.The bank discounts the interest.The effective interest rate is

• A)12.84%.
• B)12.24%.
• C)12.00%.
• D)12.42%.

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Definitions:

Duplication

The act of making an exact copy of something; in genetics, it refers to a type of mutation where segments of DNA are repeated.

Postal Money Order

A financial instrument, purchased from a postal authority, used to pay a specified amount of money to someone else.

Endorsement

The act of giving one's public approval or support to someone or something, or in financial terms, the signature on the back of a check that allows it to be deposited or cashed.

Subtle Gradations

Fine or slight differences or variations within a range or series of elements or aspects.