Use the Table to Solve the Problem

question 8

Multiple Choice

Use the table to solve the problem. Round to the nearest cent.
-A bank has $550,000 to lend for 9 months. It can lend it to a local contractor at a simple interest rate of 12%, or it can lend it to a small business that will pay 12% compounded monthly. If the bank wants to maximize its interest earned, who should receive the loan and what is the additional interest earned?

• A)Contractor; $2,029.50
• B)Business; $2,029.50
• C)Business; $925,694.00
• D)Contractor; $14,470.50

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Definitions:

Bank Account

An account held by an individual or business with a financial institution, allowing for the deposit and withdrawal of funds.

Physical Custody

The actual possession or direct control of tangible assets, documents, or securities.

Asset Records

Documentation that details the acquisition, valuation, and disposal of assets owned by an individual or organization.

External Auditors

Independent professionals outside of the organization who examine the company's financial statements to ensure accuracy and compliance with accounting standards.