Zeigler Marina Has a Line of Credit with a Local

question 74

Multiple Choice

Zeigler Marina has a line of credit with a local bank that permits it to borrow up to $1.3 million at any time. The interest rate is 0.57 percent per month. The bank charges compound interest and also requires that 5 percent of the amount borrowed be deposited into a noninterest-bearing account. What is the effective annual interest rate on this loan?

• A) 6.68 percent
• B) 7.43 percent
• C) 7.74 percent
• D) 7.80 percent
• E) 7.91 percent

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Definitions:

Artificial Insemination

Injection of sperm into the uterus to fertilize an ovum.

Ovulation

The release of an ovum from an ovary.

Ovum

A female gamete or egg cell involved in reproduction, which when fertilized by a sperm, can develop into an embryo.

Chemical

A substance produced by or used in a chemical process, described by a specific composition of atoms or molecules.