The Financial Officer of Toys and Noise Arranges a Loan

question 29

Multiple Choice

The financial officer of Toys and Noise arranges a loan of $7,500, at 8.5% interest, for 33 months. Find the amount of simple interest. (Round to the nearest cent)

• A) $1,560.21
• B) $1,753.13
• C) $8,480.21
• D) $5,460.13

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Definitions:

Negative Net Present Value

An indication that the projected earnings (discounted back to present value) of an investment will be less than the initial investment cost.

Competitor's Cost

The expenses incurred by industry rivals, which can influence competitive pricing strategies.

Required Return

The smallest annual percent yield necessary to convince people or corporations to allocate funds towards a certain security or project.

WACC

Weighted Average Cost of Capital, a calculation of a firm's cost of capital in which each category of capital is proportionately weighted, used to determine the rate of return a company must earn on its existing assets to satisfy its creditors, owners, and other providers of capital.