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

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Definitions:

Pastoral Society

A social system based on the raising and herding of livestock as a primary economic activity.

Division of Labor

An economic concept that divides tasks in a production process, where specialization increases efficiency and productivity.

Master Status

Some characteristic of a person that overrides all other features of the person’s identity.

Having a Disability

refers to the condition of having physical, mental, or emotional impairments that substantially limit one or more major life activities.