Steaks Galore Needs to Arrange Financing for Its Expansion Program

question 34

Multiple Choice

Steaks Galore needs to arrange financing for its expansion program.One bank offers to lend the required R1,000,000 on a loan which requires interest to be paid at the end of each quarter.The quoted rate is 10 percent, and the principal must be repaid at the end of the year.A second lender offers 9 percent, daily compounding (365-day year) , with interest and principal due at the end of the year.What is the difference in the effective annual rates (EFF%) charged by the two banks?

• A) 0.31%
• B) 0.53%
• C) 0.75%
• D) 0.96%
• E) 1.25%

---

Definitions:

Incubation Period

The time interval between the entry of an infectious agent into the body and the appearance of the first symptoms of the disease.

Strawberry Tongue

A condition in which the tongue is red and bumpy, resembling a strawberry, often associated with certain diseases like scarlet fever.

Scarlet Fever

A bacterial illness that develops in some people who have strep throat, characterized by a bright red rash covering most of the body.

Puncture-Proof Container

A container designed to resist being punctured, commonly used for the safe disposal of sharp objects like needles.