Justin Discounts a 115-Day Note for $26,000 at 8

question 41

Multiple Choice

Justin discounts a 115-day note for $26,000 at 8.5%. The effective rate of interest to the nearest tenth percent is:

• A)0.8%
• B)0.87%
• C)8.5%
• D)8.7%
• E)None of these

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Definitions:

Consumer Surplus

is the difference between the total amount that consumers are willing to pay for a good or service and the total amount that they actually pay.

Market Price

The immediate rate at which an asset or service can be traded in a specific trading place.

Producer Surplus

The gap between what sellers are prepared to accept for a product or service and the real amount they end up getting.

Excess Quantity

The situation where the supply of a product exceeds the demand for it at a specific price point, leading to a surplus.