On January 1,2014,ER Signed a $120,000,10%,three-Year,note Payable

question 48

Multiple Choice

On January 1,2014,ER signed a $120,000,10%,three-year,note payable.The proceeds are to be used to purchase a computer and related software for the company.The lending institution advanced proceeds of $115,800 and took a mortgage on the computer.The note is payable in three equal annual instalments starting on December 31,2014.The effective interest rate to use for this debt is (rounded to the nearest percent; do not interpolate) :

• A) 10%.
• B) 11%.
• C) 12%.
• D) 13%.

---

Definitions:

Tangible Assets

Physical assets that have value and exist in a physical form, such as machinery, buildings, and inventory.

Family Business

A commercial organization in which decision-making is influenced by multiple generations of a family who are often tied by blood or marriage.

Stringent Criteria

Strict or precise conditions that must be met or complied with.

Performance Reviews

Regular evaluations of an employee's work performance, usually conducted by their supervisor, to discuss achievements and areas for improvement.