You Desperately Need Some Money and Only Your "Miserly" Friend

question 46

Multiple Choice

You desperately need some money and only your "miserly" friend has any.He agrees to loan you the money you need if you make payments of $25 a month for the next 6 months.In keeping with his reputation,he requires that the first payment be paid today.He also charges you 1.65 percent interest per month.How much money are you borrowing?

• A)$144.04
• B)$140.98
• C)$113.94
• D)$141.70
• E)$114.96

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Definitions:

Taxable Income

Income subject to taxes, calculated by subtracting deductions and exemptions from gross income.

Total Operating Capital

Represents the total amount of capital tied up in operating assets, necessary for the day-to-day functioning of a business.

Balance Sheet

A report detailing a firm's financial state through a breakdown of its assets, liabilities, and equity from shareholders at a certain moment, offering an overview of its financial health.

Current Liabilities

Short-term financial obligations due within one year or within the company's operating cycle.