A Loan Is Offered with Monthly Payments and a 14

question 94

Multiple Choice

A loan is offered with monthly payments and a 14.5% APR. What is the loan's effective annual rate (EAR) ?

• A) 14.97%
• B) 15.50%
• C) 15.13%
• D) 15.63%

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Definitions:

Separate Accounting Entity

A fundamental accounting principle that treats a company's financial reports as distinct from those of its owners or other businesses.

Audit

A systematic examination of books, accounts, documents, and vouchers of an organization to ascertain how far the financial statements present a true and fair view.

Accuracy

The degree to which the result of a measurement, calculation, or specification conforms to the correct value or a standard.