If You Borrow $20 000 as a Five-Year Loan from the Bank

question 74

Multiple Choice

If you borrow $20 000 as a five-year loan from the bank and the bank requires you to make end-of-year payments of $4878.05,what is the annual interest rate on this loan?

• A)8 percent
• B)6 percent
• C)7 percent
• D)4 percent

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Definitions:

Standard Costs

Predetermined costs for material, labor, and overhead used as benchmarks against which to compare the actual production costs.

Direct Material

Raw materials that are directly traced and assigned to the production of a specific product.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, multiplied by the standard cost per unit of material.

Kilos

A metric unit of mass equal to one thousand grams, commonly used for measuring weight in many countries.