A Firm Has a Line of Credit and Borrows $25,000

question 126

Multiple Choice

A firm has a line of credit and borrows $25,000 at 9 percent interest for 180 days or half a year. What is the effective rate of interest on this loan if the interest is paid in advance?

• A) 4.7 percent
• B) 9.4 percent
• C) 9.9 percent
• D) 10.3 percent