What Is the Implicit Effective Annual Interest Rate on a Company

question 26

Multiple Choice

What is the implicit effective annual interest rate on a company transaction to raise $100 000 finance by drawing a commercial bill with face value of $105 000 payable in 180 days?

• A)9.746%
• B)4.76%
• C)9.65%
• D)None of the given options.

---

Definitions:

Formal Rationality

Involves clear, methodical processes and rules designed to achieve objectives efficiently and is often contrasted with substantive rationality.

Urbanization

The process by which rural areas become urban, involving an increase in the percentage of people living in urban areas compared to rural areas.

Money Economy

A system where goods and services are exchanged primarily through the medium of money, rather than through barter.

Intrinsic Power

The capability or influence derived from an individual's inherent qualities or position, not dependent on external factors.