Would It Be Worth It to Incur a Compensating Balance

question 137

Multiple Choice

Would it be worth it to incur a compensating balance of $4,000 in order to get a 1.5-percent-lower interest rate on a 1-year, pure discount loan of $300,000?

• A) Yes, if the interest rate is less than 13.64 percent
• B) No, if the interest rate is less than 13.64 percent
• C) Yes, if the interest rate is more than 1.5 percent
• D) Not enough information is given to determine

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Definitions:

Mitosis

A process of cell division that results in two genetically identical daughter cells from a single parent cell, crucial for growth and repair in multicellular organisms.

Natural Selection

The process through which species survive and evolve, in which individuals with phenotypes that are more adaptive to the environmental conditions survive and reproduce with greater success than do individuals with phenotypes that are less adaptive.

Charles Darwin

An English naturalist, geologist, and biologist best known for his contributions to the science of evolution.

Psychological Traits

Characteristics of individuals that are thought to be persistent across situations and time, influencing behavior and experiences.