Answer the Question Using the Table

question 130

Multiple Choice

Answer the question using the table. Figures are in billions of dollars. If the government passes a usury law that sets the interest rate 2 percent below the market equilibrium, the interest rate will be

• A)6 percent.
• B)8 percent.
• C)10 percent.
• D)12 percent.

---

Definitions:

Straight-Line

A method of calculating depreciation of an asset, which allocates an equal amount of depreciation to each year of the asset's useful life.

Sum-Of-Years' Digits

A depreciation method that accelerates the expense recognition, using a decreasing fraction of years remaining over the sum of the years' digits.

Double-Declining Balance

A method of accelerated depreciation which doubles the normal depreciation rate, reducing the asset's book value more quickly in its early years.

Salvage Value

The estimated residual value of an asset at the end of its useful life.