Assume That You Borrow $2,000 at 10% Annual Interest to Finance

question 85

Multiple Choice

Assume that you borrow $2,000 at 10% annual interest to finance a new business project. For this loan to be profitable,the minimum amount this project must generate in annual earnings is

• A)$400.
• B)$201.
• C)$200.
• D)$199.

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Definitions:

Bond Transactions

Financial transactions involving the issuance, trading, or redemption of bonds, which are debt securities that entities issue to raise capital.

Bond Sale

The issuance of debt securities by an entity to raise funds from investors, promising to pay back with interest.

Fair Value Method

An accounting approach where assets and liabilities are valued at their current market price to determine their worth.

Brokerage Fee

A fee charged by a broker for executing transactions or providing specialized services.