You Need to Borrow $25,000 for One Year

question 66

Multiple Choice

You need to borrow $25,000 for one year.Your bank offers to make the loan,and it offers you three choices: (1) 15 percent simple interest,annual compounding;(2) 13 percent simple interest,daily compounding (360-day year) ;(3) 9 percent add-on interest,12 end-of-month payments.The first two loans would require a single payment at the end of the year,the third would require 12 equal monthly payments beginning at the end of the first month.What is the difference between the highest and lowest effective annual rate?

• A) 1.12%
• B) 2.48%
• C) 3.60%
• D) 4.25%
• E) 5.00%

---

Definitions:

Wagner Act

Another name for the National Labor Relations Act of 1935, which established the legal right for workers to join unions and engage in collective bargaining in the United States.

Secret Ballot Elections

A voting method that ensures privacy for voters, allowing them to cast their vote anonymously to prevent influence or coercion.

Bargain

A negotiation process between two or more parties to reach a mutually agreeable outcome.

Wagner Act

A foundational piece of U.S. labor law, officially the National Labor Relations Act of 1935, which established workers' rights to collectively bargain and form unions.