Matt's Machine Company Has Borrowed $10 Million for Four Months

question 58

Multiple Choice

Matt's Machine Company has borrowed $10 million for four months at 5.5% APR, using inventory stored in a field warehouse as collateral. The warehouse fee is 0.5%, payable at the end of the loan. What is Matt's EAR?

• A)5.5%
• B)7.20%
• C)0.58%
• D)7.01%

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Definitions:

Maturation

The process of development in which an individual reaches a higher level of complexity and functionality, often through natural growth or learning.

Apprenticeship

A system of training a new generation of practitioners of a trade or profession with on-the-job training and often some accompanying study.

Piaget

Pertains to Jean Piaget, a Swiss psychologist renowned for his groundbreaking contributions to the study of child development and cognitive theory.

Formal Operational

A stage in Jean Piaget's theory of cognitive development where individuals (typically 12 years and older) gain the ability to think abstractly, reason logically, and use deductive reasoning.