Your Child's Orthodontist Offers You Two Alternative Payment Plans

question 65

Multiple Choice

Your child's orthodontist offers you two alternative payment plans.The first plan requires a $4,000 immediate up-front payment.The second plan requires you to make monthly payments of $137.41,payable at the end of each month for 3 years.What nominal annual interest rate is built into the monthly payment plan?

• A)12.31%
• B)12.96%
• C)13.64%
• D)14.36%

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Definitions:

Operating Activities

Operating Activities involve the primary day-to-day actions related to producing and delivering a company's products or services, influencing cash flow and operating income.

Net Income

The total earnings of a company after all expenses and taxes have been subtracted from total revenue.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position at a specific point in time, detailing assets, liabilities, and shareholders' equity.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, including issuing stocks, paying dividends, and borrowing loans.