After Some Questionable Activity During Your College's Annual Homecoming Party

question 33

Multiple Choice

After some questionable activity during your college's annual homecoming party, your friends need to bail you out of jail. A bail bondsman loans your friends $5000 with the condition that they will repay the loan along with 15¼ % annual simple interest. After six months you go to pay the loan, how much will you owe? Give your answer as a decimal rounded to the nearest hundredth.

• A) $5123.50
• B) $5381.25
• C) $8932.75
• D) $9575.00
• E) None of the above.

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Definitions:

Well-reasoned Decisions

Choices or conclusions derived from careful thought, analysis, and evaluation of relevant information.

Rational Expectations

The hypothesis that people form forecasts about the future based on all available information in an unbiased manner and learn from past mistakes.

Private Sector

The part of the economy that is owned and operated by individuals and private companies, not controlled by the government.

P

In economic terms, often stands for Price, which reflects the monetary cost of acquiring a good or service in the market.