Use the Following Information to Answer the Question(s)below

question 2

Multiple Choice

Use the following information to answer the question(s) below.
Taggart Transcontinental needs a $100,000 loan for the next 30 days.Taggart has three alternatives available:
Alternative #1: Forgo the discount on its trade credit agreement that offers terms of 2/5 net 35.
Alternative #2: Borrow the money from Bank A,which has offered to lend the firm $100,000 for one month at
an APR of 9%.The bank will require a (no-interest) compensating balance of 10% of the face-value of the loan and will charge a $200 loan origination fee,which means that Taggart must borrow even more than the $100,000 they need.
Alternative #3: Borrow the money from Bank B,which has offered to lend the firm $100,000 for one month at an APR of 12%.The loan has a 1% origination fee.
-The effective annual rate for Taggart if they choose alternative #2 is closest to:

• A)13.0%.
• B)13.9%.
• C)18.8%.
• D)27.0%.

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Definitions:

Contacts

Individuals or entities that one knows, especially regarded as a source of information or in a professional context to gain advantages.

Social Capital

A term representing the networks, relationships, and norms that facilitate collective action within or among groups.

Social Ties

The connections and relationships between individuals or groups that can provide support, information, or access to resources.

Power

The power to shape or control the actions of others or steer the direction of events.