Your Company Has Just Taken Out a 1-Year Installment Loan

question 96

Multiple Choice

Your company has just taken out a 1-year installment loan for $72,500.The nominal rate is 12.0%,but with equal end-of-month payments.What percentage of the second monthly payment will go toward the repayment of principal?

• A)76.85%
• B)80.89%
• C)85.15%
• D)89.63%

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Definitions:

Accrued Vacation Pay

Represents the amount of vacation time earned by employees that has not yet been used or paid out, and is recorded as a liability on the company's balance sheet.

Vacation Cost

Expenses associated with taking a vacation, including travel, accommodation, meals, and activities.

Product Warranty

A guarantee provided by the seller that a product will meet certain performance standards or can be repaired or replaced within a specified period.

Quick Ratio

A financial metric that measures a company's ability to cover its current liabilities with its most liquid assets, excluding inventory.