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On May 17, Jane Took Out a Loan for $33,000

question 57

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On May 17, Jane took out a loan for $33,000 at 6% to open her law practice office. The loan will mature the following year on January 16. Using the ordinary interest method, what is the maturity value due on January 16?


Definitions:

Quarterly Compounding

Interest calculation that occurs four times a year, effectively increasing the amount of interest accrued over time.

Effective Rate

The interest rate on a loan or financial product that reflects the compounding periods in a year, presenting a true annual rate of return.

Effective Rate

The interest rate for a loan or financial product recalculated from its nominal rate to represent an annual compound interest rate, paid in arrears.

Nominal Interest

The stated interest rate of a bond or loan, not accounting for inflation or the compounding of interest.

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