The Effective Annual Interest Rate on a One-Year,$1,000,000,12% Discount Loan

question 53

Multiple Choice

The effective annual interest rate on a one-year,$1,000,000,12% discount loan that requires a 10% compensating balance is

• A)16.0%.
• B)13.3%.
• C)13.6%.
• D)12.0%.
• E)none of the above

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Definitions:

Activity-Based Costing

Activity-based costing is an accounting method that assigns costs to products or services based on the activities required to produce them, aiming to provide more accurate product costing.

First Stage Allocations

The initial process of assigning overhead costs to different departments or cost pools in activity-based costing.

Supervising Activity

The process of overseeing and directing work activities and tasks to ensure they are executed efficiently and effectively, typically within a workplace.

Activity-Based Costing

A costing method that assigns costs to products and services based on the activities and resources that go into creating them.