Do Not Use the APR Formula for This Problem

question 43

Multiple Choice

Do not use the APR formula for this problem.Coverall Carpets Inc.is planning to borrow $12,000 from the bank.The bank offers the choice of a 12 percent discounted interest loan or a 10.19 percent add-on,one-year installment loan,payable in 4 equal quarterly payments.What is the effective rate of interest on the 10.19 percent add-on loan?

• A) 9.50%
• B) 10.19%
• C) 15.22%
• D) 16.99%

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