Jenny Needs to Borrow $16,000 for 3 Years

question 58

Multiple Choice

Jenny needs to borrow $16,000 for 3 years.The loan will be repaid in one lump sum at the end of the loan term.Which one of the following interest rates is best for Jenny?

• A)8 percent simple interest
• B)8 percent interest, compounded annually
• C)8.5 percent simple interest
• D)8.5 percent interest, compounded annually
• E)9 percent interest, compounded annually

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Definitions:

Adjusted Book Value

The net worth of a company, calculated by adjusting the assets' and liabilities' book value on the balance sheet to reflect their true market value.

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the company’s assets and earnings.

Stock Sale

The transaction or process of selling shares in a company to investors, transferring ownership in exchange for capital.

Percent Ownership

The percentage of a company or asset owned by an investor or group of investors, indicating the extent of their control or influence.