Vickie Wants to Borrow $5,000 for Three Years

question 28

Multiple Choice

Vickie wants to borrow $5,000 for three years.She will repay the $5,000 plus the finance charges in one lump sum at the end of the three-year period.If the lender charges her 12 percent add-on interest,how much will Vickie pay in finance charges?

• A)$600
• B)$1,800
• C)$6,800
• D)$5,600

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Definitions:

Inventory

The raw materials, work-in-process products, and finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.

Cost of Goods Sold

The costs directly associated with the manufacturing of goods a company sells, encompassing both the price of materials and the wages for labor.

Inventory

The total amount of goods or materials held in stock by a business, intended for sale or production.

Average Collection Period

The average amount of time it takes for a business to receive payments owed by its customers for credit sales.