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:

Tolerance

The allowable deviation in the specifications of a component or system from the stated values, which can affect its performance or compatibility.

Multiplier

A component that increases the range of a measuring device by appropriately scaling the input quantity.

Multiturn Variable

Describes a type of variable resistor or potentiometer that allows for precise adjustment over multiple rotations of its knob or dial.

Wiper Arm

A movable contact in variable resistors or potentiometers that slides across a resistive element to vary resistance.