What Is the Effective Interest Rate on a 3-Month, Noninterest-Bearing

question 9

Multiple Choice

What is the effective interest rate on a 3-month, noninterest-bearing note with a stated rate of 12% and a maturity value of $200,000?

• A)12.36%.
• B)12.00 %.
• C)11.46%.
• D)3.00%.$200,000 12% 3/12 = $6,000 $6,000/($200,000 $6,000) = 3.09%
• 3)09% 12/3 = 12.36%

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Definitions:

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Top Management

The highest level of managers in an organization, responsible for controlling and directing the overall operations.

Control Of Operations

The oversight and management of core business activities to ensure efficiency, effectiveness, and alignment with organizational objectives.

Flexible Budget Report

A budget that adjusts or flexes with changes in volume or activity, providing a more useful comparison of actual to budgeted performance.