Hammond Motors Is Considering Using a Public Warehouse Loan as Part

question 22

Multiple Choice

Hammond Motors is considering using a public warehouse loan as part of its short-term financing.The firm will require a loan of $2 million for three months.Interest on the loan will be 12% (APR,compounded quarterly) to be paid at the end of the quarter.The warehouse charges 1% of the face value of the loan,payable at the beginning of the quarter.The effect annual rate on this loan is closest to:

• A)9.3%
• B)11.3%
• C)15.2%
• D)17.1%

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Definitions:

Moral Reasoning

The process by which individuals make decisions about what is right and wrong based on values and principles.

Formal Operational

The stage of cognitive development, according to Piaget, that enables abstract, logical, and systematic thinking, typically emerging in adolescence.

Hypothetically

Involves discussing, reasoning, or theorizing based on conjecture or a supposition, rather than concrete evidence.

Metacognition

The awareness and understanding of one’s own thought processes, often referred to as "thinking about thinking."