Assume the Average Management Cost Per Account Per Year Is

question 20

Multiple Choice

Assume the average management cost per account per year is $200 and the average fees earned per account per year is $170. The average annual size of account is $1800. What is the average implicit interest rate (round to two decimals) ?

• A) -1.67 per cent
• B) 1.67 per cent
• C) 4.86 per cent
• D) 15 per cent

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales activities within a certain range.

Contribution Margin

The remaining income after removing variable expenses, allocated to settle fixed expenses and create profit.

Sales Mix

The combination of products or services that a company sells, represented in proportions or percentages.

Markup On Total Cost

A pricing strategy where a fixed percentage is added to the total cost of a product to determine its selling price.